What is the difference between the EIS and SEIS schemes for startups?

Full Explanation

SEIS (Seed EIS) offers investors 50% income tax relief on up to £200K a year in qualifying seed-stage companies; EIS offers 30% relief on up to £1M a year (£2M with knowledge-intensive companies) for growth-stage companies.

Both schemes encourage investment in young UK companies by letting individual investors reduce their tax bill. SEIS eligibility, per HMRC's current guidance: a new qualifying trade that has not been carried on for more than 3 years, gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued, and no more than £250,000 raised in total through SEIS; finance, property development and some other activities are excluded. Investors can claim 50% income tax relief on up to £200,000 invested in a tax year, and Capital Gains Tax reinvestment relief on 50% of the amount invested.

EIS eligibility, per HMRC's guidance updated on 6 April 2026: the investment is generally made within 7 years of the company's first commercial sale (knowledge-intensive companies have their own rules), gross assets of no more than £30 million before the share issue and £35 million immediately after, fewer than 250 full-time equivalent employees, and limits on the total the company can raise from the venture capital schemes, currently £10 million in any 12 months and £24 million over its lifetime for most companies. Investors claim 30% income tax relief on up to £1 million a year, or £2 million if at least £1 million goes into knowledge-intensive companies. Under both schemes, gains on the shares can be free of Capital Gains Tax if they are held for at least 3 years, and loss relief can be set against income if the investment fails.

For startups, qualifying for SEIS or EIS improves fundraising because investors get tax relief on top of the equity upside: a £100K SEIS investment with 50% relief costs the investor £50K after income tax relief. Founders should check eligibility early, often through HMRC advance assurance, because losing it through timing or a breach of the rules is costly. Limits change from time to time: check HMRC's current guidance on gov.uk and take advice. This is general information, not tax advice.

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