| EIS: investor relief | 30% of the investment, up to £1 million a year (£2 million for knowledge-intensive companies) |
| SEIS: investor relief | 50% of the investment, up to £200,000 a year |
| Minimum holding period | 3 years |
| EIS company | fewer than 250 full-time staff, gross assets up to £30 million before issue |
| SEIS company | fewer than 25 full-time staff, gross assets up to £350,000, at most £250,000 under SEIS |
| EIS term | extended to April 2035 |
What EIS and SEIS are
Both schemes work on the same principle: a young unlisted company issues new shares for cash, and the investor who subscribes gets relief on their UK income tax. Under the Enterprise Investment Scheme it is 30 percent of the investment, under the Seed Enterprise Investment Scheme for the very early stage even 50 percent. Put £100,000 into a SEIS company and you can take £50,000 off your income tax, provided you owe that much.
Capital gains tax advantages come on top: gains on a later sale of the shares are tax-free, and gains from other disposals can be deferred or partly exempted. If the company fails, the loss can be set against other income. That is why private individuals in the UK invest in start-ups on a scale rarely seen elsewhere in Europe.
The schemes are built for the long term: EIS is extended to April 2035. Budget 2026 added technical easings, among them that a company may in future issue SEIS and EIS shares on the same day, and an investment above the limits no longer loses relief entirely, only for the part above.
What the company must meet
The conditions apply to the company and its subsidiaries at the time of issue. The EIS figures have applied since 6 April 2026.
| Condition | SEIS | EIS |
|---|---|---|
| Employees (full-time equivalents) | fewer than 25 | fewer than 250 |
| Gross assets | at most £350,000 at issue | at most £30 million before and £35 million after issue |
| How much the company may raise | at most £250,000 under SEIS | up to £10 million in 12 months, £24 million in total (all schemes together) |
| Age of the business | trading for no more than 3 years | within 7 years of first commercial sale (exceptions possible) |
| Location and listing | permanent establishment in the UK, unlisted | permanent establishment in the UK, unlisted, not controlled by another company |
HMRC: Apply to use the Enterprise Investment Scheme / Seed Enterprise Investment Scheme (November 2026)
What the company may do with the money
The money must go into a qualifying business activity: the company's own trade, preparing for it, or research intended to lead to such a trade. Under EIS it must be spent within two years and may not go into buying another business. The company must carry on a qualifying trade, and the investment must carry a genuine risk of loss: guarantees, buy-back promises or preferential rights for individual investors cost the relief.
The shares must be ordinary shares, fully paid up in cash at issue, not redeemable and without preference on assets. If you plan your funding round with a convertible loan or a contribution in kind, check early whether the later shares meet these conditions.
For founders from abroad that means: a UK limited company alone is not enough. The company needs a genuine permanent establishment in the UK, and a holding company must not control it. A subsidiary of a group abroad is therefore usually no EIS candidate. How to set up a company that meets these conditions is described under UK company formation.
How an EIS or SEIS round runs
The company is responsible for its investors getting and keeping the relief.
- 1
Apply for advance assurance
Before the issue the company can ask HMRC to check whether the round is likely to qualify. UK investors almost always ask for it.
- 2
SEIS before EIS
Once EIS shares have been issued, the company can no longer issue SEIS shares. So the order of rounds belongs in the funding plan.
- 3
Issue shares and deploy the money
Shares are issued for cash, and the money goes into the qualifying business.
- 4
Compliance statement after four months
After four months of qualifying activity the company files form EIS1 or SEIS1 with HMRC. If HMRC agrees, the company receives certificates for its investors, form EIS3 under EIS.
- 5
Keep the rules for three years
If the company does not meet the conditions for at least three years after the investment, investors lose the relief.
What the investor gets
The relief is claimed in the investor's tax return, in the year of investment or, if preferred, carried back to the previous year.
| Benefit | SEIS | EIS |
|---|---|---|
| Income tax | 50% of the investment, up to £200,000 a year | 30% of the investment, up to £1 million a year (£2 million if at least £1 million goes into knowledge-intensive companies) |
| Gains from other disposals | exemption on 50% of the investment, at most £100,000 of gain exempted | unlimited deferral if invested from one year before to three years after the disposal |
| Sale of the shares | tax-free after at least 3 years if the income tax relief stood | tax-free after at least 3 years if the income tax relief stood |
| Loss | can be set against income | can be set against income, less the relief received |
HMRC: Tax relief for investors using venture capital schemes (November 2026)
Investors living abroad: the honest answer
This is the catch almost nobody talks about. The relief can only be set against income tax you pay in the UK. Any unused remainder is lost; it cannot be carried forward. If you live abroad and owe little or no UK income tax, 30 or 50 percent relief does nothing for you.
The other advantages help only to a degree. The tax-free sale concerns UK capital gains tax; whether and how your gain is taxed at home is decided by your country of residence under its own law. And a deferred UK gain falls due as soon as you leave the UK.
The scheme stays interesting for two groups: Europeans who live and pay tax in the UK, and founders who want to raise money from UK investors with a UK company. For the second group EIS is often a selling point of the funding round. If you also do research, look at R&D tax relief, and if you want to give staff equity, at employee share schemes through EMI.
Frequently asked questions about EIS and SEIS
What is the difference between EIS and SEIS?
SEIS is for the very early stage: small companies, a short trading history, at most £250,000 through the scheme, but 50 percent relief for investors. EIS is for the growth stage, with higher limits and 30 percent relief.
Can I use EIS as shareholder and director of my own company?
Often not. Anyone holding more than 30 percent with their associates or employed by the company counts as connected and gets no income tax relief. There are exceptions for directors; we check case by case.
Does EIS still exist after 2025?
Yes. EIS has been extended to April 2035.
Does EIS help me if I live abroad?
Only if you pay UK income tax, for example on UK income. The relief is set only against UK income tax.
Sources: HMRC: Apply to use the Enterprise Investment Scheme; HMRC: Apply to use the Seed Enterprise Investment Scheme; HMRC: Tax relief for investors using venture capital schemes; GOV.UK: Extension of the Enterprise Investment Scheme and Venture Capital Trust Scheme; GOV.UK: Changes to SEIS, EIS and VCT (Budget 2026)
