Let’s explore how to qualify for EIS and SEIS tax relief. In this article we’ll provide useful information for those looking to understand more about the different incentives associated with these schemes.

Appealing tax incentives under these two schemes include EIS deferral relief and SEIS tax relief, for example.

And in the event of a company struggling financially and potentially winding up, there is a level of both SEIS and EIS loss relief potentially available to investors.

Before thinking about tax relief, let’s take a look at the differences between EIS and SEIS. First of all, what is EIS?

#1 EIS

Introduced in 1994, it stands for the Enterprise Investment Scheme. EIS is a government program providing tax benefits to individuals that purchase new shares in a business.

This scheme can make a business appear more attractive and less risky to investors, helping it to raise the funds needed to grow.

In the recent tax year 2021-22, the UK saw record interest in the EIS scheme. Almost 5,000 companies raised £2.3bn in funds under the scheme, according to government statistics.

Companies using EIS can raise up to £5m per year. There is a lifetime limit of £12m and these limits apply to amounts a company receives from other venture capital schemes too, where the initial investment takes place within the initial seven years after its first sale.

Not every business is eligible for EIS though. Typically, companies that are eligible for EIS:

  • Have a permanent UK presence
  • Do not have gross assets worth above £15m before issuing shares, or £16m after this
  • Are not trading on recognised stock exchanges when issuing shares and do not intend to join them in the future
  • Are not controlled by another company
  • Do not control other companies, except for qualifying subsidiaries 
  • Do not expect to close after completing just one set of projects or an agreement

There are several other requirements too. For more details, here is the government guide to EIS.


So, what is SEIS? SEIS stands for the Seed Enterprise Investment Scheme – it became operational in 2012, almost two decades after EIS started.

Here is the full government SEIS guide detailing the other qualifying criteria – it has many similarities to EIS but supports small businesses. Qualifying criteria include the following requirements – eligible small companies:

  • Have a permanent UK presence
  • Have been trading less than three years so far
  • Have under 25 full time employees at the time of issuing any shares
  • Do not have gross assets above £350,000 when issuing shares
  • Are not a member in a partnership

Qualifying small businesses can receive up to £250,000 through the SEIS scheme. Funds raised by any new share issue should support a qualifying trade and the company should spend these within three years, in other words, they have 12 months longer than businesses using EIS.

Among the accountancy services we offer for individuals, we can help with self assessment registration, the personal self assessment tax return and also Capital Gains Tax (CGT) returns.

EIS and SEIS tax relief

In addition to CGT exemption on profits from share sales you have kept for at least three years, there is up to 50% in income tax breaks available, as per government guidance:

  • SEIS scheme: Invest up to £200,000 annually in a qualifying business and receive a 50% income tax break
  • EIS scheme: Invest up to £1m per year in a qualifying company or £2m in a ‘knowledge intensive business’ and receive a 30% income tax break

And investors also receive relief to reduce losses if the business performs far below expectations or even winds up – both EIS loss relief and SEIS loss relief are available.

Individuals purchasing shares in a SEIS or EIS business but selling them at losses can offset these against CGT and income tax bills through their self assessment tax return.

That’s a concise overview of SEIS vs EIS and how the tax relief works. For other articles covering some of our tax advice, take a look at this selection from our blog:

  • SEIS tax relief is not the same as overlap relief. For a full breakdown on how self-employed overlap relief works, take a look at this article.
  • Recently we have written about expat tax UK rules. Are you still a UK tax resident when you live and work abroad?
  • Early in 2024 there was plenty of talk about so-called side hustle tax UK requirements. How much tax do you pay on a second job?
  • Last but not least, take a look at our guide on charities. Do charities pay tax and what about Gift Aid tax relief?

We are experienced accountants offering fixed, upfront, affordable prices – whether you need advice on including EIS tax relief or any other self assessment matters! Please don’t hesitate to contact us.