SEIS & EIS



The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are two significant initiatives introduced by the UK government to encourage investment in startups and early-stage businesses.


What is SEIS?

If you're an investor or an entrepreneur seeking funding, understanding these schemes can be a game-changer. Let’s walk through the basics of SEIS and EIS, how they work, their benefits, and how they can fuel growth for startups.


The Seed Enterprise Investment Scheme (SEIS) is a UK government program designed to promote investment in small and early-stage companies. It offers attractive tax incentives to individual investors who support these startups. SEIS encourages investors to take calculated risks by providing them with substantial tax reliefs.

   Key Features of SEIS


   SEIS offers the following benefits to investors:


  • Income Tax Relief: Investors can claim up to 50% of their investment amount as income tax relief, helping reduce the overall tax liability.
  • Capital Gains Tax Exemption: Any gains made from the sale of SEIS shares are exempt from Capital Gains Tax (CGT) if certain conditions are met.
  • Loss Relief: In case of business failure, investors can offset their losses against other taxable income, further reducing the risk.
  • Carry-Back: Investors can carry back the SEIS investment to the previous tax year, maximizing the tax relief.


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Qualifying for SEIS


For a startup to qualify for SEIS, it must meet specific criteria, including:


  • Operating less than three years
  • Having fewer than 25 employees
  • Holding gross assets of under £350,000
  • Not raising more than £250,000 through SEIS

What is EIS?


The Enterprise Investment Scheme (EIS) is a UK government initiative aimed at promoting investment in higher-risk companies. EIS offers a range of tax incentives to investors who support eligible businesses. EIS funding is typically sought by startups looking to scale their operations.


Under EIS, a business can raise up to £5 million each year, and a maximum of £12 million over the company’s lifetime. 

Key Features of EIS


EIS provides several advantages for investors:


  1. Income Tax Relief: Investors can claim up to 30% of their investment amount as income tax relief.
  2. Capital Gains Tax Exemption: Similar to SEIS, EIS offers CGT exemption on gains from EIS shares, assuming certain conditions are met.
  3. Loss Relief: In the event of business failure, investors can offset losses against other taxable income, reducing potential losses.
  4. Carry-Back: Just like SEIS, EIS investments can be carried back to the previous tax year.
Qualifying for EIS


For a business to be eligible for EIS, it must meet specific criteria, including:


  • Operating for less than seven years
  • Employing fewer than 250 full-time employees
  • Possessing assets of under £15 million (pre-investment)
  • Not being controlled by another company



Comparing SEIS and EIS


While both SEIS and EIS offer compelling benefits for investors and startups, there are differences in their eligibility criteria, funding limits, and tax reliefs. Understanding these differences is crucial for making informed investment decisions or seeking funding for your startup.

How do SEIS and EIS fuel startup growth?


SEIS and EIS play a crucial role in fueling the growth of startups and early-stage businesses. By providing attractive tax incentives, these schemes attract a pool of investors willing to support high-risk ventures. This influx of capital enables startups to secure the funding needed for expansion, product development, hiring, and market penetration. 


The Bottom Line


SEIS and EIS are powerful tools that drive investment in startups and foster entrepreneurship.


As an investor, understanding these schemes can help you make tax-efficient investment decisions while contributing to the growth of innovative businesses.


If you're an entrepreneur seeking funding, SEIS and EIS can significantly enhance your startup's appeal and make it an attractive prospect for potential investors.


Whether you're an investor or an entrepreneur, harnessing the benefits of SEIS and EIS can pave the way for a more prosperous and vibrant startup ecosystem in the UK.

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