EIS and SEIS: Which One Is Right For Your Business?

Posted by Elisabetta Ferri on Apr 19, 2021 08:08: AM
Elisabetta Ferri

The two schemes, EIS and SEIS, are similar but have some important differences. And some investors and even founders are not aware of these differences that cause confusion when choosing which scheme to apply for.

This guide aims to differentiate SEIS and EIS and show startup founders which scheme they should consider getting.

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme or EIS is a well-established feature of the UK tax landscape for investors introduced by the UK government in 1994. EIS provides generous tax reliefs to investors who finance early-stage, higher-risk companies. 

EIS is designed for medium-sized businesses. It aims to help startups who have already laid the groundwork and are now looking to scale the business. Individual investors can use the EIS scheme to:

  • Invest up to £1 million per tax year
  • Receive 30% tax break in exchange
  • No capital gains taxes to pay from the selling of shares after three years

The maximum amount a company can raise under EIS funding is £5 million per year.

Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme or SEIS was first introduced by HM Revenue & Customs (HMRC) in April 2012. It focuses on early-stage companies, emphasising startups at the very early stage of their growth by offering several tax reliefs on investments made into qualified companies by individual investors.

SEIS will help you collect the funds you need to expand by offering significant tax benefits to investors when your startup is in its early stage, making a future investment in your company more appealing.

With the SEIS scheme, an individual investor may:

  • Invest up to £100,000 per tax year
  • Receive a 50% tax break in exchange for the investment
  • Avoid any Capital Gains Tax on profits
  • Obtain a Capital Gains Tax relief when reinvesting gains from an initial SEIS-qualifying company investment.

SEIS funding allows a company to raise a maximum of £150,000.

What's The Difference Between These Two?


EIS and SEIS's aim has always been the same: to provide a channel for early-stage investments and become high-growth potentials. And although EIS and SEIS are similar in several ways, the main difference is that the conditions for startups interested in participating in either EIS or SEIS are different.

SEIS is aimed at startups and very early-stage companies. On the other hand, EIS may be used for more extensive and older businesses (although these are still considered small and young in the UK industry and corporate landscapes). Also, the maximum age of the trade when the first round of SEIS funding is raised is two years, while EIS is seven years.

With EIS, you may have up to £15 million in gross assets before the investment, and you may have up to 250 employees. With SEIS, you may also have up to £200,000 or less in gross assets before the investment, and you may only have up to 25 employees. 

What Companies Qualify For Each Scheme



The following requirements must be fulfilled for a company to be deemed EIS eligible:

  • The company has a permanent establishment in the UK.
  • The company is not listed on a recognised stock exchange or intends to be listed when issuing shares. 
  • The company has no control over another company except for qualified subsidiaries.
  • No other company may have ownership of the qualifying company or own 50% or more of its shares.
  • The qualifying company, as well as any of its subsidiaries, has no gross assets worth more than £15 million before any shares are issued and not more than £16 million after 
  • The corporation must have less than 250 full-time employees at the time the shares are issued.



The following requirements must be fulfilled for a company to be deemed SEIS eligible:

  • The company has a permanent establishment in the UK.
  • The company must have under £200,000 in gross assets pre-money.
  • The company must have no more than 25 employees.
  • The company must have been trading for less than two years. Note, the date a company starts trading is different from the date of incorporation detailed on Companies House. HMRC would examine the company's profit and loss accounts rather than the date of incorporation when determining whether this test has been met.
  • The company must not be a member of a partnership with another company, as HMRC will flag this.


Choosing The Right Scheme For Your Startup


Identify the needs of your company. 

Assess which investment scheme offers more help to your business. Because of the substantial tax relief granted to investors under EIS and SEIS, every individual investor's amount is capped. This helps if your company is in its early stage from giving away too much power to a single person too early in its development. With EIS, each investor can invest up to £100,000 per tax year, and with SEIS, each investor can invest up to £1 million per tax year.

Find out which investment scheme best supports your company.

Although there are similarities to both the SEIS and EIS schemes, the big difference for startup owners is the company the schemes aim for. Find out which scheme supports your starting company and which can be used at a later stage of your startup. If your startup is in its early stage and needs a boost, SEIS is suited for you, while EIS can be used at a later point.

Check if you qualify for that scheme.

A startup can't just sell investors either SEIS or EIS. First, your company must be a qualifying company since many companies are not eligible for these schemes. Excluded trades include companies:

  • Dealing in real estate or commodities
  • Involved in banking, insurance, or money-lending industries
  • Providing legal or accounting services
  • Involved in generating and exporting electricity

It's worth noting that your company is only exempt from the EIS and SEIS schemes if you engage in any of the excluded practices for a substantial part of your business. Anything over 20% of your trade activity is considered substantial. 

If your company qualifies for the schemes, the investment must be used to qualify business activity at all times. This means using the funds to promote the company's growth and development. This includes hiring new employees or marketing the product or service.


Both EIS and SEIS are great schemes for early-stage companies and are excellent ways of attracting investors. However, learn to choose which is the suitable scheme for your startup and qualify for that scheme.

I hope this guide helped you identify which scheme is right for your business. If you have any questions regarding EIS and SEIS, you can schedule an appointment with us today. Rest assured that we will help you in answering all your questions.