The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) both serve a similar purpose – to help founders like you secure investment to grow your business.
Through these schemes, the government offers private investors tax relief to encourage them to invest in start-ups. It’s a win-win: founders get much-needed funding, and investors could get significant tax breaks. The schemes have existed for decades and have so far helped over 52,000 founders to secure investment.
What is SEIS and who is it for?
SEIS is explicitly for very young start-ups that meet these conditions:
- must be UK-based
- must be 3 years or less since first qualifying trade
- fewer than 25 employees
- less than £350,000 in gross assets
- can’t be asset-backed
- can’t be owned by another company
What is EIS and who is it for?
EIS is for bigger start-ups and scale-ups, some of which may have already benefited from SEIS. They need to meet these conditions:
- must be UK-based
- must be 7 years or less since qualifying trade
- fewer than 250 employees (or fewer than 500 for a ‘knowledge intensive’ company)
- less than £15 million in gross assets
- can’t be controlled by another company
Is my business eligible?
Most, but not all, start-ups qualify for the schemes, so the first thing you’ll need to do is check if your business fits the criteria. The government has a list of ‘excluded activities’ which is important to read. The Enterprise Investment Scheme Association also has a handy guide for founders.
What are the benefits?
The SEIS and EIS schemes make it easier for you to secure the investment you need to grow your business. And it’s also worth remembering that the benefits of investment go beyond money. Often investors will be able to provide mentoring, advice, networks and connections which can be hugely valuable.
Both schemes have lots of perks for investors too:
- SEIS – investors can get 50% initial income tax relief, with no capital gains tax or inheritance tax to pay
- EIS – investors can get 30% initial income tax relief, with no capital gains tax or inheritance tax to pay
The SEIS and EIS schemes have been essential in enabling my company to exist and grow. They break down barriers for individual investors and provide start-ups with precious – and rare – seed capital. The value of individual investors goes well beyond the cash that they inject. Their interest in the company, the doors they can open, and the guidance they provide can be empowering for founders and transformative for early-stage companies. It sets the standards globally for supporting and accelerating entrepreneurship.
Sabrina Del Prete, Founder and CEO of KoreLabs
What’s next?
If you’ve decided your business is ready for investment and you think you qualify for the SEIS or EIS, then your next step is to think about how to approach investors.
Many investors will ask if you qualify for the SEIS or EIS schemes. Some will ask for Advance Assurance, an HMRC form that gives an indication that your business is highly likely to be eligible to use the SEIS or EIS schemes.
About the author
Christiana Stewart-Lockhart joined the Enterprise Investment Scheme Association (EISA) as Director General in February 2022. She previously spent more than a decade working for economic think tanks in Westminster and Brussels. Christiana holds a BA in Politics from the University of York and she regularly speaks at events across the whole of the UK. She is a member of TISA’s Children’s Financial Education Policy Council and also sits on the Advisory Board for the All Party Parliamentary Group for Entrepreneurship.