While both the SEIS and EIS schemes have the same core purpose, many distinguishing factors exist between these two that founders and investors need to know.


So if you’re a founder looking to raise money for your company, you may be able to make the deal more attractive by offering the benefit of EIS or SEIS relief.


And as an investor, it is worth getting to know these two reliefs in detail.


This article will explain the difference between SEIS and EIS and their advantages and disadvantages for investors and founders.





The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) schemes are designed to make investments in UK-based businesses more appealing as part of the UK government’s ongoing initiative to support SMEs.


Recognising the challenges that early-stage companies face in raising the funds they need to expand. These programs provide generous tax relief to investors willing to invest their confidence and resources into these profitable businesses.


SEIS targets startups and businesses in their early stages. It was designed to help early-stage businesses that would usually be considered too risky for anyone but the most enterprising investors.


On the other hand, EIS may be used by more extensive and older enterprises (although it is still considered small and young in the UK industry and corporate landscapes). It works well for sophisticated and more prominent scale investors.


The trade must be performed in the UK in both cases, there are types of trades that qualify, and the company can’t be in financial distress or receiving state aid.


Companies not qualified for the SEIS and EIS schemes


Companies would be ineligible for the scheme if these excluded trades account for more than 20% of their regular operations.


The following activities listed below are examples of those that are not permitted:

  • Forestry
  • Production of coal or steel
  • Farming or market gardening
  • Energy generation
  • Exporting electricity
  • Leasing or property development
  • Managing hotels or nursing homes
  • Dealing in futures or securities
  • Legal or financial services (banking and insurance)
  • Offering services to a non-qualifying company


Summary of Differences




Investors mustn’t have a previous connection with the trade or with the company before, and they can’t be or become an employee, though there is some scope for directors (SEIS) or to come in as ‘business angels’ (EIS).


Here is a summary of the differences between EIS and SEIS for investors.

  • EIS’s income tax relief is 30% and 50% for SEIS.
  • The Capital Gains Tax on the investment itself for EIS and SEIS is exempt.
  • EIS has a straight deferral regarding ‘roll over’ of other gains and conditional exemption of 50% with SEIS.
  • The maximum investment under EIS is £1,000,000 and £100,000 with SEIS.




EIS is designed to provide tax relief to investors who purchase shares in a business. Its advantages include investors can claim income tax relief on amounts used to subscribe for new shares in a company, up to a maximum of £2 million per year for shares issued on or after April 6th, 2018, provided they invest more than £1 million in knowledge-intensive companies.


On the basis that the shares are kept for at least three years, the investor’s income tax liability is reduced by 30% of the amount invested up to the annual investment limit.


Additional tax reliefs are available for EIS owners who qualify for income tax relief on shares, in that exemption from Capital Gains Tax on disposal of those shares is potentially available provided the shares have been held for the necessary three years. Companies and investors should obtain advance confirmation advance assurance from HMRC that EIS applies to ensure the qualification is met.


Meanwhile, SEIS aims at startup companies and individual investors interested in making equity investments. Its advantages include investors claiming income tax relief up to a £100,000 annual investment cap for funds used to subscribe for new ordinary shares issued by qualifying companies.


If the shares are held for three years, the investor’s income tax liability is reduced by half of the amount invested, up to the annual investment limit (per investor).


Furthermore, a SEIS investor whose income tax liability has been reduced due to SEIS relief on shares may be eligible for a CGT exemption on disposal of those shares if they have been owned for three years. Companies and investors alike should obtain advance assurance from HMRC that EIS applies to ensure the qualifications are met.


Additionally, SEIS offers Advance Subscription Agreements or ASAs. It’s sometimes used to quickly raise capital for a company when it’s difficult to determine its value shares. It allows you to pay a subscription fee to a company early, with the shares issued later.


ASAs allow companies to receive a provisional indication from the HMRC that they can apply for tax relief for their investors. This assures investors that the company they invest in is qualified to offer the tax benefits stipulated under the SEIS scheme.


ASA was created to give investors peace of mind that their investments would be eligible based on their information. It enables businesses to get a preliminary indication from HMRC that they can seek tax relief for their investors.


As a result, investors may rest assured that the firm they choose to invest in will receive the numerous tax benefits stated under the SEIS scheme.




EIS and SEIS are both equity investments with many advantages. There are no specific disadvantages.


However, if you plan to invest in EIS and SEIS, you can be a company director, not an employee. Your stake in the company can’t exceed 30%, and you are “locked-in” or committed for a minimum of three years.


Lastly, since businesses aren’t listed on the stock exchange, there is no easy way to sell your shares as companies aren’t listed on the stock market.




SEIS shares can’t be issued by a corporation that has received EIS funding. On the other hand, a business that has issued SEIS shares can issue EIS shares if the two share issues don’t occur on the same day and certain additional conditions regarding the issue of the shares and the use of the funds raised are met.


Here is a summary of the differences between EIS and SEIS for companies.

  • The maximum age of the trade when the first round of funding is raised in EIS is seven years, while SEIS is in two years.
  • Before the shares are issued for EIS, the maximum gross assets are £15,000,000 and £200,000 for SEIS.
  • After the shares are issued with EIS, the maximum gross assets are £16,000,000 and none with SEIS.
  • The maximum number of employees (FTE) for EIS is 250 and 25 for SEIS.
  • The annual limit on the amount raised with EIS is £5,000,000 and £150,000 with SEIS.
  • The lifetime limit on the amount raised with EIS is £12,000,000 and £150,000 with SEIS.
  • The time limit for the company to spend the money raised for EIS is two years and three years for SEIS.
  • The earliest application can make to HMRC for EIS is after the company has been trading for four months. Meanwhile, for SEIS, it is after 70% of the money can be raised employed in the trade.




With SEIS, the maximum amount you can invest is up to £100,000 in a single tax year, which can spread over several companies. The minimum investment varies depending on the fund; however, it is usually around £10,000 in most cases. There’s also a ‘carry back’ facility available.


Meanwhile, the EIS scheme can boost your company’s funds up to £5 million (or £12 million in some cases). You can also invest in EIS in one of two ways: investing directly in a single EIS-qualifying company or through a fund manager who will develop a portfolio for you. Both options may have a place in the portfolio of a seasoned investor.




To obtain funding, business owners must give up equity in their company. Consider how much you’re willing to give up in exchange for the investment you need. Professional investors will determine a likely range of returns from investing in your company and will only provide funding if you can meet these returns.


With EIS and SEIS, you’re getting more than just funding; you’re also getting direct support from a team of skilled and driven professionals whose mission is to help your company reach its full potential.


The EIS and SEIS schemes’ success to date and their continued popularity with SMEs is seasoned investors, entrepreneurs, and business people who provide support, advice, encouragement, and even day-to-day operational involvement. They have a direct stake in ensuring their investment, your company, succeeds.




The UK Government created EIS and SEIS to help startups and businesses find investors willing to risk their funds for success. Both schemes provide a safety net for investors, making them more willing to take a chance to profit from innovation.


And although there are similarities to both the SEIS and EIS schemes, the big difference for startup owners is the company the schemes aim for.


Find out which scheme suits your company or your planned investment better.


If you want to learn more about the schemes or are interested in investing in EIS & SEIS, give us a call today.


Rest assured that someone will get in touch with you and assist you.



Originally published April 26, 2021, 08:08: AM, updated April 11, 2022


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