SEIS and EIS

SEIS & EIS Tax Relief

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) provide tax relief for individuals investing in qualifying companies. SEIS is intended for companies in the earliest stages of development, while EIS is available to larger and more established businesses.

Both schemes offer substantial Income Tax and Capital Gains Tax reliefs. They can also be useful to companies looking to raise finance, as the availability of tax relief can make an investment more attractive to potential shareholders.

Tax Innovations advises investors on the reliefs available, including the use of EIS and SEIS to reduce or defer Capital Gains Tax. We also help companies looking to raise finance through these schemes, advising on eligibility, share issues and HMRC requirements.

EIS Capital Gains Tax Deferral Relief

An individual who has sold a business, property or other asset may be able to defer the Capital Gains Tax arising by investing an amount equal to the gain in qualifying EIS shares.

The shares must be issued within one year before or three years after the original disposal. The gain is deferred until the EIS shares are sold or another event brings it back into charge.

SEIS Capital Gains Tax Reinvestment Relief

SEIS provides a different form of relief. An investor who makes a capital gain and invests in qualifying SEIS shares can claim an exemption for 50% of the amount reinvested, subject to a maximum exemption of £100,000 per tax year.

The gain and the qualifying investment must generally fall within the same tax year. However, investments made in the following tax year may also qualify where the investor elects to carry back the SEIS Income Tax relief to the year in which the gain arose.

Unlike EIS deferral relief, the exempt amount is not brought back into charge when the SEIS shares are sold, provided the relevant conditions continue to be met.

Withdrawal or Reduction of Relief

The tax reliefs outlined above are subject to a number of conditions. Relief may be withdrawn or reduced if the shares are disposed of within the relevant period, or if the investor receives certain benefits from the company.

This can include the repayment of certain debts, loans made to the investor or other arrangements that amount to the investor receiving value from the company.

The company’s activities must also continue to qualify. A change in the nature of its trade, ownership or other circumstances can result in investors losing relief they have already claimed.

It is therefore important that companies understand these obligations when raising finance, rather than simply checking that the proposed investment qualifies at the outset.

Additional SEIS Conditions

SEIS is intended for companies that are still at an early stage. To qualify, the company must generally have been trading for less than three years, have no more than £350,000 in gross assets and fewer than 25 employees.

The maximum amount a company can raise under SEIS is £250,000. It must also not have previously received EIS or Venture Capital Trust investment.

Additional EIS Conditions

EIS is available to larger companies, generally with fewer than 250 employees and within seven years of their first commercial sale, subject to certain exceptions.

For most companies, gross assets must not exceed £30 million immediately before the share issue and £35 million immediately afterwards. The limits are lower for certain Northern Ireland companies.

From April 2026, most qualifying companies can raise up to £10 million in a 12-month period, with higher limits for qualifying knowledge-intensive companies.

We can review a company’s eligibility, advise on the proposed share structure and assist with obtaining advance assurance from HMRC before shares are issued. This involves examining the company’s activities, its existing shareholders, the proposed investment terms and the intended use of the funds.

Claiming SEIS and EIS Tax Relief

Before investors can claim tax relief, the company must submit a compliance statement to HMRC using form SEIS1 or EIS1.

For EIS, this can normally be done once the qualifying business activity has been carried on for at least four months. For SEIS, the company can submit the statement once it has traded for four months or spent at least 70% of the money raised by the relevant share issue.

Once HMRC has accepted the compliance statement, the company can issue SEIS3 or EIS3 certificates to its investors, enabling them to claim the relevant tax reliefs. A separate compliance statement is required for each share issue.

Advance assurance from HMRC does not guarantee that an individual investor will qualify for relief, and the company must continue to comply with the scheme conditions after the investment.

Tax Innovations advises both investors and companies on SEIS and EIS, including eligibility, the tax consequences of investing, structuring share issues and preparing the necessary HMRC applications and claims.

If you are considering an investment or planning to raise finance through either scheme, we can advise on the tax implications before the arrangements are finalised.