The two tax schemes that make UK angel investing actually work, plus how to get advance assurance before you start raising.
Who should read this: UK founders preparing to raise from angels or syndicates, anyone planning a pre-seed or seed round, and any founder whose investors are asking about SEIS or EIS eligibility before they'll commit.
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. Most UK angels won't write a cheque without SEIS or EIS eligibility. The relief reduces their downside risk by up to half, and that's the whole reason the schemes exist.
Here's everything you need to know, including a step-by-step on getting HMRC advance assurance before you start pitching.
Most founders use both schemes at different stages. SEIS comes first for very early-stage companies, EIS comes next as you grow.
| SEIS | EIS | |
|---|---|---|
| Stage it suits | Pre-seed, first £250k of investment | Seed and beyond |
| Investor income tax relief | 50% | 30% |
| Investor annual cap | £200,000 per tax year | £1m per tax year (£2m if at least £1m goes into knowledge-intensive companies) |
| Company lifetime raise | £250,000 | £24m (most companies), £40m (knowledge-intensive) |
| Company annual raise | n/a (one-off lifetime cap) | £10m (most), £20m (knowledge-intensive) |
| Company age limit | Less than 3 years from start of trade | Less than 7 years from first commercial sale (10 for knowledge-intensive) |
| Employee limit | Fewer than 25 | Fewer than 250 (500 for knowledge-intensive) |
| Gross assets cap | £350,000 at share issue | £15m before share issue, £16m after (higher for knowledge-intensive) |
| CGT exemption on exit | Yes, after 3 years held | Yes, after 3 years held |
| Loss relief if it fails | Yes, against income or CGT | Yes, against income or CGT |
| Sunset clause | None | 6 April 2035 (extended in Finance Act 2024) |
The EIS company limits were raised in 2026 from £5m annual and £12m lifetime. Older articles still quote the previous numbers, so double-check anything you read elsewhere against gov.uk.
SEIS is the early-stage scheme. It exists to make backing brand-new companies palatable for angels who are taking on real risk. 50% income tax relief is the closest thing to a money-back guarantee in early-stage investing.
Two practical points the table doesn't capture:
EIS is the bigger sibling. It works on the same principle but for companies that have outgrown SEIS, with smaller relief (30%) but much larger raise limits.
Two things worth highlighting beyond the table:
Most UK startups use both schemes in sequence, not in parallel. The natural progression looks like this. You launch the company. You raise your first £250,000 from angels under SEIS, giving them the maximum 50% relief. You hit the SEIS lifetime cap. You move to EIS for the next round, giving new investors 30% relief instead of 50% but unlocking a much bigger funding pool.
A few practical points:
This is the calculation that makes angels say yes.
An angel invests £20,000 in your SEIS-qualifying startup.
Worst-case downside: roughly 28% of the cheque. Best-case upside: unlimited and tax-free. That asymmetry is the whole game. The same logic applies to EIS at 30% relief instead of 50%.
This is a stylised illustration, not a guarantee. The maths assumes:
Before quoting these numbers to investors, run the specific scenario past an accountant or tax adviser. Investors will ask, and getting it slightly wrong erodes trust faster than not having a worked example at all.
Advance assurance is a letter from HMRC saying your company is likely to qualify for SEIS or EIS. It's free to apply for. You don't legally need it. But practically, it's the single most useful piece of paperwork in a UK seed round.
Investors will ask for it on the first call. Without it, you're asking them to take their word that they'll get the tax relief. With it, they don't have to. That changes the conversation.
Advance assurance equals investor confidence. Walking into a pitch with the letter in hand tells angels they don't need to take the eligibility on faith. Walking in without it tells them you're either disorganised or gambling with their relief. Get it before your first scheduled meeting. Not after. Not during. Before.
Read HMRC's eligibility rules end to end. The most common reasons for rejection:
If anything is borderline, get specialist tax advice before applying. HMRC removed the right of appeal on advance assurance decisions, so a rejection is final for that application.
Send HMRC this exact bundle:
| Document | What it should show |
|---|---|
| Business plan or pitch deck | What the company does, who it serves, how it makes money, how the funds will grow it |
| Three-year financial projections | Revenue, costs, headcount, cash flow |
| Latest company accounts (and any subsidiaries) | Filed accounts if you have them, management accounts if you don't |
| Memorandum and Articles of Association | Up-to-date, as filed at Companies House |
| Share register | Current shareholders and shareholdings |
| Funds raised summary | How much you're raising, how it will be used |
| Any draft subscription or shareholder agreement | If applicable |
A clean pitch deck does most of this work. Treat the business plan as a structured Q&A answering exactly what HMRC asks rather than a separate document.
Show HMRC this is a real fundraise, not a hypothetical one. Acceptable evidence:
You don't need a fully closed round. You do need names.
A short narrative, two paragraphs is usually enough. Cover two things:
Don't paste in template wording. HMRC reads these.
Use the venture capital schemes service on gov.uk. Attach the documents above plus the relevant SEIS or EIS checklist (HMRC publishes both). If you're applying for both schemes, submit one combined application.
HMRC's published target is 15 to 40 working days. Most applications take six to eight weeks in practice. They may come back with questions. Reply quickly. Each round of questions effectively pauses the clock.
If HMRC is satisfied, you receive a letter confirming the company is likely to qualify. That letter is what you forward to investors. Keep a clean PDF copy ready to share before any pitch meeting.
Applying too late. Founders often start the application the same week they start pitching. By the time the letter arrives, the round is dead. Apply six to eight weeks before your first scheduled investor meeting at the absolute latest.
Assuming you qualify without checking. Some activities are excluded outright, others are partially excluded. Read HMRC's list. If you're a fintech, prop-tech, or anything close to financial services, get advice before assuming.
Confusing SEIS and EIS. They're separate schemes with separate caps. A company can use SEIS first then move to EIS once it outgrows the SEIS limits. Investors can use both for the same company in the same round. Get the structure right with a tax adviser.
Missing the risk-to-capital statement. This is now the single most common reason for rejection. HMRC takes it seriously. Don't paste in vague text from a template.
Breaking the rules after the investment. SEIS and EIS eligibility is conditional for at least three years after each share issue. If you change trade significantly, return capital to investors, or breach the employee or asset limits, you and your investors lose the relief. Always check before making major structural changes.
Forgetting the investor side. SEIS and EIS relief is claimed by the investor, not the company. After share issue, you have to send each investor a compliance certificate (SEIS3 or EIS3) so they can actually claim. Founders sometimes forget this step. Investors don't.
A realistic SEIS or EIS timeline from "I'm planning to raise" to "round closed":
A founder who has SEIS or EIS advance assurance in hand before their first scheduled investor meeting, can explain the scheme in two sentences, has structured the company to qualify from day one, and treats compliance certificates as part of their post-close checklist rather than an afterthought. The best founders treat this paperwork as part of their fundraising prep, not a tax-adviser problem to deal with later.
SEIS and EIS sit alongside the rest of your seed-round paperwork. Once advance assurance is in hand, the next pieces are usually:
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This is general information, not financial, tax, or legal advice. SEIS and EIS rules are complex and change. Always check the latest HMRC guidance and seek independent professional advice before making any tax or investment decisions.