If you are raising your first round, SEIS and EIS are probably the most powerful tools you have for getting investors over the line. But the rules are fiddly and the paperwork is unforgiving. This guide explains what the two schemes are, how they differ, and the two points where founders most often come unstuck.
What SEIS and EIS Actually Are
Both are government schemes that reward people for investing in early-stage UK companies by giving them generous tax relief. SEIS, the Seed Enterprise Investment Scheme, is aimed at the very earliest-stage companies and gives investors 50% income tax relief on what they put in. EIS, the Enterprise Investment Scheme, is for companies a little further along and gives 30%.
The income tax relief is only the headline. Both schemes also carry capital gains tax advantages and loss relief, and that combination is what really changes the maths for an investor. If the company does well, gains on the shares can be free of capital gains tax. If it fails, loss relief lets the investor set much of what they lost against their tax bill, softening the downside. Taken together, the reliefs mean someone can back a risky young company knowing the government is effectively sharing both the risk and the reward.
For a founder, that is the point worth understanding: SEIS and EIS do not just help your investors, they make your round easier to close. An investor weighing your company against a dozen others is far more likely to commit when 50% or 30% of their money comes straight back off their tax bill. It is why so many UK angel and seed rounds are done on these schemes, and why getting the SEIS or EIS side right is part of fundraising, not an afterthought. Our SEIS and EIS tax relief calculator shows what that relief, and the downside protection if the company fails, looks like in pounds.
The Key Differences
The two schemes sit at different stages of a company's life. In broad terms:
| SEIS | EIS | |
|---|---|---|
| Company stage | Earliest stage | Slightly later stage |
| Income tax relief | 50% | 30% |
| Raise limit | Lower | Much higher |
| Company age, asset and employee limits | Tighter | More generous |
The short version: SEIS is for the first money into a brand-new company, and EIS picks up where SEIS leaves off, for larger amounts as the company matures. The exact thresholds, on how much you can raise, how old the company can be, its assets and its headcount, are set by HMRC and change from time to time, so check the current limits before you rely on them. The principle, though, is steady: SEIS rewards the earliest and riskiest backers most, and EIS keeps the incentive going as you grow.
Can You Use Both SEIS and EIS?
Yes, and many companies do. The common pattern is to raise your first slice under SEIS, up to the SEIS limit, then move to EIS for the rest of the round or for later rounds. Done in the right order, your earliest backers get the more generous SEIS relief and everyone after them still benefits from EIS. Sequencing matters, though: the SEIS shares usually need to be issued before the EIS shares, and getting that order wrong can cost your investors their relief. It is one of the things most worth taking advice on before you issue any shares, because it is far easier to plan than to unpick afterwards.
What Advance Assurance Is, and Why Investors Expect It
Advance assurance is HMRC confirming in writing that, on the information given, an investment in your company is likely to qualify. It is not legally required, but in practice most angel investors, syndicates and crowdfunding platforms will not invest without seeing it, because it protects the tax relief they are counting on.
It helps to be clear about what advance assurance is and is not. It is HMRC's opinion based on the information you give it, not a cast-iron guarantee, and the final position is only settled once you have raised and filed your compliance statement. But it is the closest thing to certainty an investor can get up front, which is exactly why they ask for it. Plan for it to take time, too: HMRC usually takes a few weeks to respond, and longer if it has questions, so it is worth knowing how long SEIS and EIS advance assurance takes before you set a closing date for your round.
One catch trips up a lot of founders: HMRC will not accept an application without at least one named potential investor on file. No named investor, no application, so line this up before you start.
The Application, Step by Step
Confirm eligibility honestly first. Then pull together the documents HMRC wants:
- A business plan or pitch deck
- Two to three years of financial forecasts
- Your latest accounts, if you have any
- Your articles of association
- The named investor's details
What HMRC is really looking for across all of these is consistency: a clear story, told the same way in the plan, the forecasts and the deck, that shows the money funds genuine growth and is genuinely at risk. We go through exactly what each item needs to show in our guide to the documents you need for an advance assurance application.
Submit through HMRC's venture capital schemes portal. Expect at least one follow-up question, and answer it carefully, because there is no right of appeal if the assurance is refused. That is why the application has to be right first time, and why it pays to understand why advance assurance applications get rejected before you submit.
Where Founders Come Unstuck
The same handful of problems account for most refusals and delays:
- No named investor.
- A trade on HMRC's excluded list.
- A business plan that does not clearly show the money is at genuine risk.
- Rushing the application and triggering avoidable questions.
Underneath most of these sits one bigger test, the risk-to-capital condition: HMRC wants to see that the money is funding real growth and that investors could genuinely lose it. An arrangement that looks low-risk, or designed mainly for the tax break, tends to fail however tidy the paperwork. Each of these is avoidable with the application prepared properly, and we break them all down in our piece on why SEIS and EIS advance assurance gets rejected.
After the Raise, the Bit People Forget
Advance assurance is not the finish line. Once you have issued the shares, you have to file a compliance statement, SEIS1 or EIS1, before HMRC will authorise the certificates. Only then can you issue the SEIS3 or EIS3 certificates your investors need to actually claim their relief. This step has its own timetable and its own paperwork, and it is the part founders most often forget in the relief of having closed the round. Miss it, or get it wrong, and your investors cannot claim, however good the advance assurance was.
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We handle SEIS and EIS advance assurance and compliance on a fixed fee, from the application through to your investors' certificates, with an accountant on it from start to finish. Book a free call and we will tell you straight where you stand.
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This article is a general guide and not tax advice. SEIS and EIS eligibility and the relevant limits depend on your specific circumstances and can change, so always confirm the current rules with a qualified accountant or HMRC before you apply.