SEIS and EIS

Also called Seed Enterprise Investment Scheme, Enterprise Investment Scheme

Tax reliefs that make investing in small UK companies far more attractive. Strict rules, and easy to disqualify yourself.

What it means

SEIS and EIS give individual investors income tax relief on subscriptions for new shares in qualifying companies, along with capital gains reliefs and loss relief.

SEIS applies to the earliest stage, with a lower company limit and a higher rate of relief. EIS applies to slightly later stage companies with higher limits.

Why it matters

For many UK angel investors, eligibility is not a bonus — it is a condition of investing at all. A company that cannot offer it is competing for a much smaller pool of money.

The rules disqualify companies for reasons founders do not anticipate: the trade, the age of the company, the amount already raised, the use of the money, and the structure of the shares.

What it looks like in practice

Apply for advance assurance from HMRC before the round. It is free, it takes weeks rather than days, and investors will ask for it.

Shares must be new ordinary shares, fully paid in cash, with no preferential rights to assets on a winding up. Money must be spent on a qualifying trade within a set period.

Issue the shares, then submit the compliance statement so investors receive their certificates. Investors cannot claim without them.

What to watch out for

Taking the money before the shares are issued, which can break eligibility. This is where convertible instruments cause problems.

Preference shares. Standard investor protections that are fine in a normal round can disqualify the whole issue.

Connected persons and existing shareholding limits, which catch founders' family members.

Where to get proper advice

HMRC's Venture Capital Schemes guidance, and an accountant who does advance assurance applications regularly. Do not improvise this one.