Introduction
Starting a business in the UK is exciting. But tax bills can bite. That’s where SEIS EIS credits come in. Alongside R&D credits, they can cut your tax bill and make your funding go further.
No jargon. No fuss. Just real relief.
You’ve heard of SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme). They’re two powerful reliefs sitting under the UK’s risk finance umbrella. By offering income tax relief, capital gains rollover, and loss relief, they help both investors and startups.
Plus, R&D credits reward you for smart tinkering.
We’ll break down:
- What SEIS EIS credits are
- How they work
- Eligibility and claiming
- R&D credits in brief
- A real-world example
- Why Oriel IPO makes life easier
Let’s dive in.
What Are SEIS and EIS?
First up, the basics.
- SEIS: Designed for very early startups.
- EIS: Aimed at slightly more established ventures.
Both schemes offer SEIS EIS credits in three main flavours:
- Income tax relief
- Capital gains tax (CGT) relief
- Loss relief
Here’s the gist:
- SEIS gives up to 50% income tax relief on investments up to £100,000 a year.
- EIS offers 30% income tax relief on up to £1 million (or £2 million for knowledge-intensive firms).
- You can carry back relief to the previous tax year if you want earlier benefit.
Underpinning it all is the concept of general business credits. Think of them like a voucher you apply against your UK tax bill. You invest, then subtract relief from what you owe HMRC. Simple.
How SEIS EIS Credits Work
You might wonder: “What’s the fine print?” Let’s unpack the mechanics.
1. Income Tax Relief
You invest in a qualifying company. HMRC sends you a certificate (SEIS1 or EIS3). Include it in your self-assessment. Voilà—your income tax drops.
- SEIS: 50% of investment as relief
- EIS: 30% of investment as relief
2. Capital Gains Tax Relief
Made a gain? You can either:
- Defer a gain by investing into an EIS company (rollover relief).
- Exempt gains on disposal of shares held for at least three years.
3. Loss Relief
If the company fails, you can offset losses:
- Against your income
- Or against future capital gains
This cushion lowers your downside. It’s not perfect insurance, but it helps.
4. Claiming Process
- Get advance assurance from HMRC (optional but handy).
- Invest and receive your SEIS1/EIS3.
- File self-assessment with the certificate.
- Tick the boxes.
If you’ve ever wrestled with US Form 3800 (General Business Credit), the UK process feels lighter. No 30+ credit types to juggle. Just three neat reliefs under each scheme.
R&D Credits: A Quick Overview
While you’re at it, don’t ignore R&D credits. They reward innovation.
- SME R&D relief: 230% deductible on qualifying spend.
- RDEC (large company): 13% credit on qualifying spend.
You claim via your Company Tax Return (CT600). HMRC crunches the numbers. Then you either reduce your tax bill or take a cash payment.
Combine SEIS EIS credits with R&D relief and you’re in tax-optimisation heaven. Or at least, somewhere very nice.
Eligibility and Claiming SEIS EIS Credits
You can’t invest in your Grandma’s tea shop and call it SEIS. There are rules.
Who Qualifies?
- Company
- Must be UK-based and trading.
- Fewer than 25 employees for SEIS, fewer than 250 for EIS.
- Gross assets under £200k (SEIS) or £15m (EIS).
- Investor
- Must not be a ‘connected person’.
- No controlling rights.
- Use of Funds
- Money must further the trade.
- No property development, finance, or legal advice.
When to Claim
- Apply for advance assurance if you want peace of mind.
- Raise funds.
- Send certificate to investors.
- They file self-assessment.
A few tips:
- Start early. HMRC paperwork takes weeks.
- Keep records. Clear, dated files save headaches.
- Consult a specialist accountant if you hit red flags.
Real-World Example
Imagine Ellie’s e-bike startup. She’s pre-revenue and needs £200,000 to build prototypes.
- Investor Alex puts in £50,000.
- He gets £25,000 back as SEIS income relief (50%).
- Ellie secures another £150,000 from angel syndicates via Oriel IPO.
- Each investor claims 30% EIS relief.
That’s a net injection of £155,000. Not bad.
Ellie also spends £80,000 on R&D.
– She claims an extra £184,000 deduction (230% of £80k).
– Pays less corporation tax or gets a cash credit.
Now she has runway, and Alex’s downside is cushioned by loss relief. Everyone’s happier.
Why Use Oriel IPO for SEIS EIS Credits?
You could hunt through spreadsheets and HMRC guides. Or you could use Oriel IPO. Here’s why we’re different:
- Commission-free funding. No hidden fees nibbling your raise.
- Curated, tax-efficient opportunities. We vet every deal.
- Educational resources. We break down SEIS EIS credits in plain English.
- Community support. Connect with investors, mentors, and peers.
- Maggie’s AutoBlog. Automatic SEO and GEO-targeted blog content to keep your audience in the loop post-funding.
With Oriel IPO, you’re not alone. You get tools, guides, and hands-on help. Plus, our marketplace is built by investors and founders who’ve been there. We like to keep it simple, honest, and effective.
Wrapping Up
SEIS, EIS, and R&D credits are no magic wand. But they’re close. If you’re a UK founder or an angel investor, SEIS EIS credits can shift the odds in your favour.
- SEIS slashes up to 50% off income tax.
- EIS chips away 30% of your liability.
- R&D relief rewards your inventive side.
Claiming is straightforward if you follow the steps. And using a platform like Oriel IPO makes it smoother still.
Ready to take the hassle out of tax relief and raise funds the smart way?
