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Please scroll down to see how EIS/SEIS can help founders to support with fundraising and long-term growth.
Please scroll down to see how EIS/SEIS can help founders to support with fundraising and long-term growth.
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are UK government initiatives designed to help startup and scaleup businesses raise equity investment. These schemes work by offering generous tax reliefs to investors – 30% for EIS and 50% for SEIS – which significantly reduces their investment costs and helps to mitigate the risk.
This helps to make your business more attractive to potential backers. Additional tax benefits, including capital gains tax exemption, loss relief, and inheritance tax relief, further enhance the appeal of investing in your business.
Some companies may also qualify as Knowledge-Intensive (KI), unlocking enhanced EIS benefits including higher investment limits (up to £20m versus the standard £12m) and extended age limits (10 years versus 7 years).
Since their introduction, the EIS and SEIS have facilitated more than £34 billion of investment into 59,000 UK businesses across diverse sectors – including technology, life sciences and consumer. Many university spin-outs, startups, and more established businesses have all benefited including Revolut, Monzo, Depop, Pip & Nut, and Zoopla.
By making investment more attractive through tax reliefs, the EIS and SEIS help you access capital that might otherwise be difficult to secure. Many founders also gain something equally valuable: the expertise and networks of their investors. Business angels and professional fund managers often provide hands-on guidance, drawing on their own experience and contacts to help grow your business.
Not all businesses qualify for the SEIS and EIS and the administration around the schemes is managed by HMRC. Business often go through a process called Advance Assurance with HMRC, which can help to reassure potential investors that the company is likely to meet the requirements.
SEIS is for very early-stage startups raising their first £250,000. Investors can claim 50% income tax relief when investing through the SEIS.
EIS is typically accessed next, supporting businesses ready to scale with 30% income tax relief. Companies can typically raise up to £5million per annum and £12million in total through the EIS.
Knowledge-Intensive (KI) companies – some companies qualify as Knowledge Intensive, recognising that these typically take longer to scale.
These companies can access enhanced EIS limits, including higher funding limits (up to £20m) and extended timeframes (up to 10 years old).
To qualify for EIS and SEIS, your company needs to meet eligibility criteria around trading activity, company age, employee numbers, and assets.
Most business activities qualify, though some sectors are excluded (such as property development, financial services, and legal/accountancy services).
Early preparation is essential. You'll need a detailed business plan, clear growth projections, and professional advice to ensure compliance.
Securing Advance Assurance from HMRC gives investors confidence that they'll receive tax relief and makes fundraising significantly easier.
The EIS Association (EISA) is the official trade body for the EIS and SEIS ecosystem, working to help UK startups and scaleups access the capital they need to grow.
As a member, you gain access to:
Connected Railway
Emma Brown
Partner, Wilson Wright LLP — 8 March 2022
Andrew Aldridge
Partner, Head of Marketing, Deepbridge Capital — 8 March 2022