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SEIS and EIS Explained for UK Founders

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.

SEIS vs EIS at a glance

Most founders use both schemes at different stages. SEIS comes first for very early-stage companies, EIS comes next as you grow.

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 in plain English

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:

• The money you raise has to be spent on growing the business within three years of the share issue. Don't sit on it.
• SEIS has no sunset clause. It continues indefinitely under current rules.

EIS in plain English

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:

• Knowledge-intensive companies (KICs) get higher limits across the board. To qualify, your company spends at least 10% of operating costs on R&D for three years (or 15% for one year) and meets a skilled-staff test. The R&D-heavy version of your company gets longer to use EIS, raises more, and has higher employee and asset caps.
• EIS was extended in the Finance Act 2024. The sunset is now 6 April 2035, so you have a long runway to use it.

SEIS first, then EIS

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:

• A single round can use both schemes. Some investors get SEIS-eligible shares, others get EIS-eligible shares, often in the same closing.
• You can't double-dip. The £250,000 SEIS cap is across the company's lifetime, not per round.
• Some founders rush to EIS too early to take advantage of bigger ticket sizes. That leaves SEIS slots unused and angels disappointed. Burn the SEIS cap first.
• You can apply for SEIS and EIS advance assurance in the same application. HMRC will assess both.

Worked example: what £20,000 of SEIS looks like for an investor

This is the calculation that makes angels say yes.

An angel invests £20,000 in your SEIS-qualifying startup.

• Day one: They claim £10,000 back through 50% income tax relief.
• Their net cost is £10,000.
• If your company succeeds and they sell their shares for £100,000 three years later, the capital gain (£100,000 minus £20,000 = £80,000) is fully exempt from Capital Gains Tax. They keep the lot.
• If your company fails and the shares become worthless, they can claim loss relief on the £10,000 net cost against their income or CGT. At a 45% additional-rate tax bracket, that's another £4,500 back. Their actual loss is £5,500 on a £20,000 stake.

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%.

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.

Why advance assurance matters more than the schemes themselves

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.

Step-by-step: how to get HMRC advance assurance

Step 1. Confirm you qualify

Read HMRC's eligibility rules end to end. The most common reasons for rejection:

• The trade is excluded (always check)
• The company is more than 3 years old for SEIS, or more than 7 years from first commercial sale for EIS
• The risk-to-capital condition isn't clearly met

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.

Step 2. Pull together your documents

Send HMRC this exact bundle:

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.

Step 3. Get evidence of investor interest

Show HMRC this is a real fundraise, not a hypothetical one. Acceptable evidence:

• Signed indication of interest or letter of intent from a named angel or VC
• Confirmed pre-commitment from a crowdfunding platform like Seedrs or Crowdcube
• Documented conversations in progress

You don't need a fully closed round. You do need names.

Step 4. Write a risk-to-capital statement

A short narrative, two paragraphs is usually enough. Cover two things:

• The funds will be used to grow and develop the business (hiring, product, marketing, market expansion), not to pay off debt, distribute to shareholders, or fund low-risk activities.
• Investors stand to lose more than they would gain back in tax relief if the company fails.

Don't paste in template wording. HMRC reads these.

Step 5. Submit through the gov.uk portal

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.

Step 6. Wait 4 to 8 weeks

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.

Step 7. Forward the assurance letter to investors

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.

Common mistakes founders make

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.

Timeline at a glance

A realistic SEIS or EIS timeline from "I'm planning to raise" to "round closed":

• Weeks 1 to 2: Prepare documents, finalise pitch deck, draft business plan, line up first verbal investor commitments.
• Week 2 to 3: Submit advance assurance application.
• Weeks 3 to 10: HMRC processes the application. You continue investor outreach in parallel.
• Week 10: Advance assurance letter received.
• Weeks 10 to 16: Run the round. Issue shares to investors as they sign.
• Within 2 years of each share issue: Submit the SEIS1 or EIS1 compliance statement to HMRC, receive the SEISC or EISC certificate, then issue SEIS3 or EIS3 compliance certificates to each investor.
• Three years from each share issue: All investors must hold the shares to keep their tax relief. Don't let any of them exit early.

What to read next

SEIS and EIS sit alongside the rest of your seed-round paperwork. Once advance assurance is in hand, the next pieces are usually:

• The pitch deck: the document that takes the first investor meeting from "interesting" to "send me the data room"
• The financial ask: how much to raise, what for, and how to defend the number
• The data room: what investors expect to see when they say "send me everything"

If grants are a better fit at your stage (non-dilutive, no investor management overhead), try YourGrantBuddy.com.

Where to go deeper

• HMRC: Apply for the Seed Enterprise Investment Scheme (the official source, always check here for current rules)
• HMRC: Apply for the Enterprise Investment Scheme (EIS-specific rules, current limits, qualifying trades)
• HMRC: Apply for advance assurance on a venture capital scheme (the application portal itself)
• SeedLegals: SEIS and EIS guide (practical walkthrough with screenshots, written for founders)

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.