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This is an educational overview only. EIS and SEIS involve complex tax rules that vary depending on your personal circumstances. Before claiming any relief, take advice from a qualified tax adviser or accountant. HMRC guidance is authoritative — this document is a starting point, not a substitute for it.

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What EIS and SEIS are

EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) are UK government programmes that provide tax reliefs to individual investors who invest in qualifying early-stage companies. They are designed to encourage private investment into high-risk, high-growth businesses by reducing the effective cost of the investment and limiting the downside. For most UK angel investors, EIS and SEIS relief are a central part of the investment case. A £100,000 EIS investment with 30% income tax relief has an effective cost of £70,000. If the company fails completely, loss relief may reduce the effective loss further.

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SEIS — for the earliest stage

SEIS is for very early-stage companies. The company must:
  • Have been trading for less than 3 years
  • Have fewer than 25 full-time equivalent employees
  • Have gross assets of no more than £350,000
  • Be carrying on a qualifying trade (most trades qualify; financial services, property development, and a few others do not)
SEIS reliefs for the investor:
  • 50% income tax relief on investments up to £200,000 per tax year
  • Capital gains tax exemption on any gain when you sell the shares (if held for 3+ years)
  • Loss relief — if the company fails, you can offset the loss (net of income tax relief) against income tax
  • Capital gains reinvestment relief — invest a capital gain into SEIS and reduce the CGT on that gain by 50%

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EIS — for the growth stage

EIS applies to companies that are slightly more established than SEIS companies, or that have already used SEIS. The company must:
  • Have been trading for less than 7 years (or 10 years for knowledge-intensive companies)
  • Have fewer than 250 full-time equivalent employees
  • Have gross assets of no more than £15 million before investment
  • Be carrying on a qualifying trade
EIS reliefs for the investor:
  • 30% income tax relief on investments up to £1,000,000 per tax year (£2,000,000 for knowledge-intensive companies)
  • Capital gains tax deferral — defer a capital gain by reinvesting it into EIS shares
  • Capital gains tax exemption on gains when you sell the shares (if held for 3+ years)
  • Loss relief — if the company fails, offset the loss (net of income tax relief) against income tax

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The 3-year hold requirement

To retain EIS or SEIS relief, you must hold the shares for at least 3 years from the date of issue. If you sell before 3 years, the income tax relief is clawed back. Important for ASA investors: If you invest via an Advance Subscription Agreement (ASA), the 3-year clock starts when the shares are actually issued — at the qualifying funding round when the ASA converts — not when you made the original payment. This can significantly extend the effective hold period.

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Advance assurance

Before investing, confirm the company has EIS or SEIS advance assurance from HMRC. This is a letter from HMRC confirming that, based on the information provided, the company appears to qualify. It is not a guarantee — the final determination is made when the company files its compliance statement — but it significantly reduces the risk of an unexpected eligibility problem. If a company has not applied for advance assurance, ask why. For most qualifying companies, it is a straightforward process.

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The EIS3 / SEIS3 certificate

After investment, once the company has filed its compliance statement with HMRC, it will issue you an EIS3 or SEIS3 certificate. You use this certificate to claim income tax relief on your self-assessment tax return. Keep your certificate safe — HMRC can request it if your return is queried.

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Common EIS/SEIS complications to watch for

Bridging rounds and ASAs — see the ASA timing issue above. EIS relief attaches to shares, not to the ASA itself. Preference shares — EIS and SEIS require ordinary shares. If the deal involves any kind of preference or enhanced rights, check the eligibility carefully with your adviser. University spinouts — the relationship between the university (as a potential connected person) and the licensing structure can create EIS complications. See the spinout guide or ask AngelAI. Investor employment by the company — if you become a director or employee of the company after investing, specific rules apply to when you can exercise options or dispose of shares without losing relief.