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The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are UK government initiatives designed to encourage private investment into early-stage and high-growth companies.
By offering generous tax incentives, the schemes aim to support innovation, job creation, and economic growth, while helping investors manage the higher risks associated with investing in young businesses.
SEIS is targeted at very early-stage companies that are raising their first external funding. Investors can receive 50% income tax relief on investments of up to £200,000 per tax year, provided the shares are held for at least three years. Any gains made on SEIS shares are free from Capital Gains Tax (CGT), and additional loss relief may be available if the company does not succeed. EIS supports more established growth companies that are looking to scale. Investors can claim 30% income tax relief on investments of up to £1 million per year, or £2 million if investing in knowledge-intensive companies. EIS also offers CGT deferral, CGT-free growth on qualifying shares, and loss relief.
Both schemes are long-term investments and are best suited to investors who understand the risks of investing in unlisted or AIM-listed companies. These businesses are often innovative and ambitious but may take time to grow, and some will fail. The tax reliefs available through EIS and SEIS help to reduce downside risk and improve the overall risk-reward balance.
Investors should ensure they are comfortable with illiquidity and the potential for loss, and they are encouraged to seek independent financial advice before investing. When used appropriately, EIS and SEIS can play a valuable role in a diversified investment portfolio while supporting the UK’s entrepreneurial ecosystem.
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The NEW EIS Association Accreditation Course
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Frequently asked questions
EIS and SEIS are typically suitable for investors who pay UK income tax, have a higher tolerance for risk, and can commit capital for the long term. These schemes are often used by experienced investors looking to diversify their portfolios and support early-stage UK businesses, while benefiting from tax-efficient growth.
To retain the full tax reliefs, shares must generally be held for a minimum of three years from the date of issue (or from when the company begins trading, if later). Selling earlier may result in tax relief being withdrawn.
Investing in early-stage companies carries a risk of loss. However, EIS and SEIS offer loss relief, which allows investors to offset some of their losses against income tax or capital gains, significantly reducing the overall financial impact if an investment does not succeed.
EIS and SEIS investments are illiquid, meaning there is usually no ready secondary market. Investors should expect to hold their shares until a potential exit, such as a company sale or listing, which may take several years or may not occur at all.
Income tax relief can usually be claimed once the company has issued shares and received HMRC authorisation. Investors will be provided with an EIS3 or SEIS3 certificate, which can be used to claim relief via a tax return or through HMRC.
Investors can access EIS and SEIS either by investing directly into individual companies or through professionally managed funds. Funds can offer diversification and expert selection, but may involve additional fees.
Yes. Investors can invest up to £200,000 per tax year in SEIS and up to £1 million per tax year in EIS (or £2 million for knowledge-intensive companies), subject to individual tax circumstances.
Latest news
Recent updates and press releases from EIS Association.
“The Enterprise Investment Scheme is the envy of the world and one of the key drivers for economic growth in the UK. It is imperative that the UK Government continues to back the Scheme in order to continue to create skilled jobs, support innovation and grow the companies of the future. EISA’s work in ensuring a positive environment for patient capital in the UK has never been more important, for entrepreneurs and investors alike.”
Andrew Aldridge
Partner, Head of Marketing, Deepbridge Capital — 8 March 2022
“At SeedLegals we do a good fraction of all SEIS/EIS applications in the UK, so it’s vital we’re both up to speed on any upcoming rules changes with HMRC, as well as being given the opportunity to provide feedback on behalf of the thousands of UK startups each year who depend on those tax initiatives to grow our business. EISA is our channel for doing that, and it provides a great way to connect and network with investors and funds. An essential resource for anyone professionally involved in this space.”
Anthony Rose
Founder & CEO, SeedLegals — 8 March 2022
“I can highly recommend the EISA for EIS fund managers or organisations working closely with that community. They run interesting and relevant events, as well as providing actionable insights on all things EIS related.”
Jonathan Hollis
Managing Partner, Mountside Ventures — 7 March 2022
“The EISA fights tirelessly to ensure that the SEIS and EIS provisions are understood, remain relevant and benefit as many UK businesses as possible. They keep their members informed of any technical changes in a timely manner and also lobby Government to make sure that any changes are appropriate and realistic. Being a member of the EISA simply makes me a better adviser in this area.”
Emma Brown
Partner, Wilson Wright LLP — 8 March 2022
“The EIS Association provides a vital platform for industry participants to understand current trends in the market, regulatory updates and ongoing discussions with Government and Government bodies. For smaller organisations, such as ourselves, the value of the EIS Association in updating industry knowledge and interacting with the wider community represents an exceedingly useful single point of contact, with the team always at hand to offer swift advice and insight. Importantly, it reiterates the focus around EIS, being the nurturing of early stage UK companies and job creation in high skilled sectors.”
Rajeev Saxena
Founder & Managing Director, Velocity Capital Advisors Limited — 22 March 2022
“GrowthInvest have been members of EISA for several years and strongly recommend that anyone within the industry should become members. They act as a great focal point for the wider marketplace whether platforms, fund managers advisers or investors, and their interaction with government is crucial for the EIS industry. We have found that their technical seminars, webinars, and regular networking events have been valuable to the team and the company in a number of ways.”
Daniel Rodwell
Chief Executive, GrowthInvest — 15 March 2022
“I have been going to EISA events for the last 16+ years. EISA is a great champion of UK Venture Capital and a useful window into what is going on. Any serious early stage VC should be a member.”
Richard Hoskins
Director, Kin Capital — 7 March 2022
“As members of EISA we are glad to be working alongside our fellow members to promote the benefits of the EIS to the industry, policy-makers and businesses. As members we’ve benefited from the EISA’s technical seminars and have enjoyed the networking opportunities offered through the year.”
Henry Whorwood
Head of Research and Consultancy, Beauhurst — 7 March 2022