The two tax schemes that make UK angel investing actually work.
If you're raising money from individual investors in the UK, SEIS and EIS are the most important acronyms you'll learn. They're government schemes that give your investors serious tax relief when they back your company. That means your startup becomes a much more attractive bet, and your fundraise gets significantly easier.
Here's how they work.
SEIS (Seed Enterprise Investment Scheme) is designed for very early-stage companies. When an investor puts money into a SEIS-qualifying company, they can claim 50% income tax relief on their investment, up to £200,000 per tax year. So if someone invests £20,000, they can reduce their tax bill by £10,000. That's a powerful incentive.
Your company can raise up to £250,000 in total through SEIS. To qualify, you need to be a UK-based company, less than three years old, with fewer than 25 employees and gross assets under £350,000.
EIS (Enterprise Investment Scheme) works similarly but at a larger scale. Investors get 30% income tax relief on investments up to £1 million per year (or £2 million if your company qualifies as "knowledge-intensive"). Your company can raise up to £12 million in total through EIS over its lifetime.
EIS companies can be older and larger than SEIS ones, but there are still rules: fewer than 250 employees, gross assets under £15 million, and the company must be less than seven years old (or ten for knowledge-intensive companies).
Most UK angel investors expect SEIS or EIS eligibility. It's not a nice-to-have. Without it, many will simply pass. The tax relief significantly reduces their downside risk, which is the whole reason the government created these schemes.
Advance assurance is a letter from HMRC confirming your company is likely to qualify for SEIS or EIS. It's free to apply for, and it typically takes four to eight weeks. You don't need it legally, but practically, it's essential. Investors will ask for it. Having it ready before your first conversation signals that you're serious and organised.
You apply through HMRC's online portal. You'll need to describe your company, its trade, how you'll use the investment, and your cap table. It's straightforward if your company genuinely qualifies.
Waiting until they've already found investors to apply — it takes weeks, and delays kill deals. Assuming they automatically qualify without checking — some activities are excluded, like property development and financial services. And not realising that SEIS and EIS are for your investors' benefit, not yours directly. You don't get the tax relief. They do. But their relief is your leverage.
A founder who has advance assurance in hand before their first investor meeting, can explain the scheme in two sentences, and has factored SEIS/EIS eligibility into their company structure from day one. The best founders treat this as part of their fundraising prep, not an afterthought.
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Try the funding finder →This is general information, not financial or legal advice. Always do your own research and seek independent professional advice.