SEIS/EIS
What is SEIS? A Beginner’s Guide to Tax-Efficient Startup Investment
Introduction
Raising early-stage funding is one of the biggest challenges for UK startups. Many promising businesses struggle to attract investors because early-stage investing is high risk.
This is where the Seed Enterprise Investment Scheme (SEIS) helps. SEIS is a government-backed initiative designed to make startup investing more attractive by offering investors significant tax reliefs. By reducing the financial risk for investors, SEIS helps founders raise funds more easily.
For startups, SEIS can be a game-changer, enabling businesses to secure investment from angel investors, family offices, and early-stage venture capital firms (VCs).
How Does SEIS Work?
SEIS allows startups to raise up to £250,000 from investors while providing them with attractive tax incentives.
Investors who qualify for SEIS can claim:
50% Income Tax Relief – Investors can deduct half of their investment amount from their income tax bill.
Capital Gains Tax (CGT) Exemption – If SEIS shares are held for at least 3 years, no CGT is due when selling them.
Loss Relief – If the investment fails, investors can offset losses against tax, reducing downside risk.
For startups, SEIS means:
Easier fundraising – Investors are more willing to invest in high-risk early-stage companies.
More investor interest – SEIS-backed startups stand out to angel investors.
Faster funding rounds – Reduced risk means investors commit funds more quickly.
Who is Eligible for SEIS?
Your company must meet certain HMRC requirements to qualify for SEIS:
UK-based company – Your startup must have a UK presence and conduct most of its business here.
Less than 3 years old – SEIS is designed for early-stage startups.
Fewer than 25 employees – This includes full-time and part-time staff.
Gross assets under £350,000 – The business cannot exceed this threshold before issuing SEIS shares.
A qualifying trade – Certain businesses (e.g., property investment, banking, legal services) do not qualify.
Not raised over £250,000 under SEIS before – A company can only raise up to this amount through SEIS.
How to Apply for SEIS Advanced Assurance
Most investors will require SEIS Advanced Assurance before committing to funding. This is pre-approval from HMRC confirming that your business qualifies.
SEIS Application Process (Step-by-Step)
Gather Required Documents – Business plan, financial forecasts, and company details.
Submit an SEIS Advanced Assurance Request – Filing the required documents to HMRC.
Receive Approval – If approved, investors can claim SEIS tax benefits.
SEIS Tax Benefits for Investors
Many startups struggle to raise investment, but SEIS makes early-stage investing highly attractive.
50% Income Tax Relief – Reduces taxable income for the year the investment is made.
Capital Gains Tax Exemption – No CGT if shares are held for at least 3 years.
Inheritance Tax (IHT) Relief – SEIS shares can be exempt from inheritance tax if held for 2+ years.
Loss Relief – If the company fails, investors can claim back up to 45% of their losses.
Common SEIS Mistakes to Avoid
Many startups face delays or rejections when applying for SEIS due to common mistakes.
Top Mistakes That Can Delay SEIS Approval
Not checking eligibility before applying.
Incomplete financial forecasts – HMRC requires detailed projections.
Not structuring investment correctly – SEIS shares must meet specific requirements.
Applying too late – SEIS must be in place before investors receive shares.
Final Thoughts: Is SEIS Right for Your Startup?
If your startup is raising its first round of investment, SEIS is one of the most powerful funding tools available.
Why SEIS is a Game-Changer for Startups
Easier to raise capital – Investors benefit from major tax reliefs.
More investor interest – Your startup becomes a more attractive opportunity.
Faster funding rounds – Investors commit faster due to reduced risk.
Introduction
Raising early-stage funding is one of the biggest challenges for UK startups. Many promising businesses struggle to attract investors because early-stage investing is high risk.
This is where the Seed Enterprise Investment Scheme (SEIS) helps. SEIS is a government-backed initiative designed to make startup investing more attractive by offering investors significant tax reliefs. By reducing the financial risk for investors, SEIS helps founders raise funds more easily.
For startups, SEIS can be a game-changer, enabling businesses to secure investment from angel investors, family offices, and early-stage venture capital firms (VCs).
How Does SEIS Work?
SEIS allows startups to raise up to £250,000 from investors while providing them with attractive tax incentives.
Investors who qualify for SEIS can claim:
50% Income Tax Relief – Investors can deduct half of their investment amount from their income tax bill.
Capital Gains Tax (CGT) Exemption – If SEIS shares are held for at least 3 years, no CGT is due when selling them.
Loss Relief – If the investment fails, investors can offset losses against tax, reducing downside risk.
For startups, SEIS means:
Easier fundraising – Investors are more willing to invest in high-risk early-stage companies.
More investor interest – SEIS-backed startups stand out to angel investors.
Faster funding rounds – Reduced risk means investors commit funds more quickly.
Who is Eligible for SEIS?
Your company must meet certain HMRC requirements to qualify for SEIS:
UK-based company – Your startup must have a UK presence and conduct most of its business here.
Less than 3 years old – SEIS is designed for early-stage startups.
Fewer than 25 employees – This includes full-time and part-time staff.
Gross assets under £350,000 – The business cannot exceed this threshold before issuing SEIS shares.
A qualifying trade – Certain businesses (e.g., property investment, banking, legal services) do not qualify.
Not raised over £250,000 under SEIS before – A company can only raise up to this amount through SEIS.
How to Apply for SEIS Advanced Assurance
Most investors will require SEIS Advanced Assurance before committing to funding. This is pre-approval from HMRC confirming that your business qualifies.
SEIS Application Process (Step-by-Step)
Gather Required Documents – Business plan, financial forecasts, and company details.
Submit an SEIS Advanced Assurance Request – Filing the required documents to HMRC.
Receive Approval – If approved, investors can claim SEIS tax benefits.
SEIS Tax Benefits for Investors
Many startups struggle to raise investment, but SEIS makes early-stage investing highly attractive.
50% Income Tax Relief – Reduces taxable income for the year the investment is made.
Capital Gains Tax Exemption – No CGT if shares are held for at least 3 years.
Inheritance Tax (IHT) Relief – SEIS shares can be exempt from inheritance tax if held for 2+ years.
Loss Relief – If the company fails, investors can claim back up to 45% of their losses.
Common SEIS Mistakes to Avoid
Many startups face delays or rejections when applying for SEIS due to common mistakes.
Top Mistakes That Can Delay SEIS Approval
Not checking eligibility before applying.
Incomplete financial forecasts – HMRC requires detailed projections.
Not structuring investment correctly – SEIS shares must meet specific requirements.
Applying too late – SEIS must be in place before investors receive shares.
Final Thoughts: Is SEIS Right for Your Startup?
If your startup is raising its first round of investment, SEIS is one of the most powerful funding tools available.
Why SEIS is a Game-Changer for Startups
Easier to raise capital – Investors benefit from major tax reliefs.
More investor interest – Your startup becomes a more attractive opportunity.
Faster funding rounds – Investors commit faster due to reduced risk.
Unlock SEIS tax relief and attract more investors.
SEIS can make your startup far more attractive to investors, but only if you structure it correctly. Speak to an SEIS expert today and ensure you maximise your funding potential.