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

Full Explanation

Both schemes incentivise investment in UK startups by allowing investors to reduce their tax liability. SEIS eligibility: company must be less than 2 years old, pre-revenue (or early revenue <£200K), employ fewer than 25 people, and be developing qualifying business (excludes finance, property, utilities). Investors can claim 50% tax relief on up to £100K invested annually, plus 50% capital gains relief if they sell at a loss. EIS eligibility: company less than 7 years old (sometimes 10), fewer than 249 employees, annual turnover under £15M, and £12M in gross assets. Investors claim 30% relief on up to £1M invested annually. EIS also offers loss relief (if the investment becomes worthless, investors can claim loss against other income). For startups, qualifying for SEIS or EIS dramatically improves fundraising because investors get tax relief on top of equity upside. A £100K investment with 50% SEIS relief costs the investor only £50K after tax — attractive deal. Founders should verify SEIS/EIS eligibility with a tax specialist early; losing eligibility due to timing or employee count is costly. Many UK funds and syndicates specialise in SEIS/EIS-eligible deals.

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