Ready to Raise EIS or SEIS Investment?

The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are two of the most powerful fundraising tools available to UK growth companies. By attaching generous HMRC-backed tax reliefs to your shares, they make your equity significantly more attractive to investors — often the difference between a successful raise and a failed one.

Most of the content written about EIS and SEIS is aimed at investors: how to claim income tax relief, when to trigger CGT disposal relief, how to use loss relief if a company fails. That is useful information for the people writing the cheques.

This guide is written for the people raising the money: founders, CEOs and finance leads at early-stage and growing UK businesses. It is a practical guide to what EIS and SEIS fundraising actually involves from the company’s side — and why bringing in a Finance Director or CFO with direct experience of EIS and SEIS rounds is one of the highest-value hires you can make before opening a funding round.

Getting the HMRC advance assurance application wrong, missing key post-investment reporting deadlines or misclassifying your company’s eligibility can delay or derail a raise entirely. An experienced FD who has navigated this before can prevent those outcomes and, just as importantly, present your financials in a way that gives investors confidence from the outset.

A Note from Our Founder — Adrian Lawrence FCA

EIS and SEIS fundraising is one of those areas where the gap between a founder’s expectation and the reality of the process is consistently wider than it should be. I have spoken with too many founders who have begun investor conversations without advance assurance in place, only to find that sophisticated angels slow down or withdraw the moment that uncertainty surfaces. Getting the preparation right before the round opens — not during it — is what separates a clean, confident raise from a stressful one.

At FD Capital, we specifically look for Finance Directors and CFOs who have been through the advance assurance process, managed the compliance statement filings and monitored the three-year investment period on behalf of an EIS or SEIS-funded company. That experience cannot be replicated by someone who has only read the HMRC guidance — it is built through having sat across the table from HMRC queries, having built the financial projections that satisfy both HMRC and investors simultaneously, and having managed the ongoing obligations that founders often underestimate when they close a round.

If you are preparing for an EIS or SEIS round — or if you are mid-raise and realise you need more senior finance support than you currently have — I am happy to have a direct conversation about what you need and who in our network is the right fit. Every mandate I take on is handled personally. There are no junior account managers involved in our searches.

Speak to Adrian about your EIS or SEIS fundraise →

Understanding EIS and SEIS: Two Tools for Two Different Stages

EIS and SEIS are not interchangeable. They are structured for different stages of a company’s development, with different limits, different eligibility criteria and different tax reliefs for investors. Understanding which one applies to your current fundraise — and whether you can use both in sequence — is the starting point for any well-structured round.

Both schemes are administered by HMRC. The tax reliefs they attach to qualifying investments make UK startup equity more competitive internationally, and both have been updated relatively recently. SEIS limits were significantly increased in April 2023, and knowing the current figures matters: a surprising amount of content online still quotes the old, lower limits.

SEIS: The Seed Enterprise Investment Scheme

SEIS is designed for the very earliest stage of a company’s life. It is aimed at businesses that are pre-revenue or in their first years of trading, helping them attract the angel investment that is otherwise very difficult to secure at that stage.

SEIS investor tax reliefs

For investors, SEIS offers the most generous tax reliefs of any UK government-backed scheme. On a qualifying investment of up to £200,000 per tax year, an investor can claim:

50% income tax relief — so £100,000 invested costs £50,000 after tax at the higher rate
Full CGT exemption on gains if shares are held for at least three years
50% CGT reinvestment relief on capital gains reinvested into SEIS
Loss relief — if the company fails, the investor can offset losses against income tax, meaning the effective downside for a 45% taxpayer is less than 28p per £1 invested

These are exceptional reliefs. They exist precisely because SEIS-stage companies are high risk, and without them, very few external investors would write cheques at this stage.

SEIS limits — updated April 2023

The April 2023 Budget significantly improved SEIS. The maximum a company can raise under SEIS increased from £150,000 to £250,000. The gross assets test limit increased from £200,000 to £350,000. The age limit (the company must generally be under three years old) and the employee cap (25 full-time equivalent employees) remain unchanged.

If you are reading content that still quotes £150,000 as the SEIS limit, it predates the 2023 changes and the limits throughout cannot be trusted.

What does SEIS money have to be used for?

SEIS investment must be used for a qualifying business activity within three years of the investment. Broadly, this means trading activities — not property investment, not financial activities, not paying off existing loans. An FD who has run SEIS rounds will know exactly how to structure use-of-funds in a way that satisfies HMRC’s requirements and gives investors clarity on how their capital will be deployed.

EIS: The Enterprise Investment Scheme

EIS is a larger, more flexible scheme for companies that have typically passed the earliest seed stage and are now scaling. It can follow on from a SEIS round, and for the right company it can raise substantially more capital.

EIS investor tax reliefs

30% income tax relief — on investments of up to £1m per tax year (£2m for knowledge-intensive companies)
Full CGT exemption on gains after a minimum three-year holding period
CGT deferral relief — capital gains from other assets can be deferred by reinvesting in EIS
Loss relief — if the company fails, losses can be offset against income or capital gains

While the income tax relief (30%) is lower than SEIS (50%), the scale of EIS investment means it is the primary vehicle for Series A and growth rounds where investors are writing larger cheques.

EIS company eligibility

For EIS, the company must generally be under seven years old at the time of the first EIS investment — ten years for knowledge-intensive companies (KICs), broadly those that spend a significant proportion of revenue on R&D or hold patents. The company must have gross assets of no more than £15 million immediately before investment and £16 million immediately after, and no more than 250 employees (500 for KICs).

EIS can raise up to £12 million under the scheme in total — £20 million for KICs — and no more than £5 million in any 12-month period from risk finance schemes.

Knowledge-intensive companies

KIC status opens meaningfully higher limits for EIS — both on investor relief (£2m per year rather than £1m) and on total company raise (£20m rather than £12m). An FD with EIS experience will quickly identify whether your business qualifies and whether it is worth structuring towards KIC criteria. The distinction is material enough to be worth exploring before you start a round.

EIS vs SEIS at a Glance

The table below sets out the key differences between the two schemes as they stand following the April 2023 Budget updates.

	SEIS	EIS
Maximum company raise	£250,000 (updated April 2023)	£12m (£20m for knowledge-intensive companies)
Income tax relief for investors	50% of amount invested	30% of amount invested
Maximum investor relief per year	£200,000 invested	£1,000,000 (£2m for KICs)
Company age limit	Under 3 years trading	Under 7 years (10 years for KICs)
Maximum gross company assets	£350,000 (updated April 2023)	£15m before / £16m after investment
Maximum full-time employees	25	250 (500 for KICs)
CGT disposal relief	50% CGT reinvestment relief	Full CGT exemption after 3 years
Can follow on from the other?	Used first — SEIS then EIS	Can follow on from a SEIS round
Loss relief if company fails	Up to 67.5p recovered per £1 (45% taxpayer)	Up to 61.5p recovered per £1 (45% taxpayer)

Source: HMRC EIS guidance (GOV.UK) and HMRC SEIS guidance (GOV.UK). Figures reflect the 2024/25 tax year.

Why EIS and SEIS Make Your Round More Investable

It is worth being explicit about why these schemes matter to the mechanics of a fundraise, not just the tax position of your investors.

Early-stage UK equity is a high-risk asset class. Without EIS or SEIS, an angel investor writing a £100,000 cheque into an unproven company is taking 100% of the downside exposure if the company fails. With SEIS, the effective downside for a higher-rate taxpayer is around £27,500 — because income tax relief immediately returns £50,000 and loss relief recovers most of the remainder. That risk transformation is what makes UK angels willing to invest at pre-revenue stage in volumes they would not otherwise contemplate.

For your company, this means that EIS or SEIS eligibility is not a nice-to-have — it is often a prerequisite for closing a round. Serious angel investors and many early-stage VCs will ask about EIS/SEIS status very early in a conversation. If you cannot confirm eligibility, or if you have not yet obtained advance assurance from HMRC, you will often lose momentum in the raise.

A CFO who has run EIS or SEIS rounds understands this dynamic and will front-load the advance assurance process accordingly — giving you the certainty to include EIS/SEIS eligibility in your investor materials from day one.

Securing HMRC Advance Assurance: Why This Is Where Your CFO Earns Their Fees

Advance assurance is a written confirmation from HMRC that, based on the information provided, your company’s shares will likely qualify for EIS or SEIS relief. It is not legally binding, but it is the closest thing you have to certainty before a round closes — and most sophisticated investors will expect you to have it.

The advance assurance application is not complicated in concept, but it requires a level of preparation that many founders underestimate. HMRC receives thousands of applications and a poorly prepared submission will either be rejected outright or come back with queries that add weeks to your timeline. Either outcome can damage investor confidence in a live fundraise.

What HMRC needs for an advance assurance application

A complete application needs to include:

A clear description of your business activities and trading history
Financial projections — typically three years, prepared to a standard that demonstrates the business is commercially credible
Details of the proposed share issue: number of shares, price per share, investor terms
Confirmation of company structure, including any subsidiaries
Details of any previous state aid or risk finance received
Confirmation that the funds will be used for qualifying business activities
Evidence that the company meets the relevant age, gross assets and employee tests

The financial projections section is where most applications either succeed or stumble. HMRC expects to see coherent numbers with clear assumptions — not back-of-envelope forecasts. An experienced CFO will build projections that are both credible to HMRC and compelling to investors: the same document serves both audiences.

Common advance assurance rejection reasons

Applications are frequently queried or rejected because:

The trading activity description is too vague — HMRC cannot assess whether it is a qualifying trade
Financial projections are inconsistent with the described business model
The company has previously received state aid that affects eligibility
The share structure does not meet the requirements (for example, investor shares have preferential rights that disqualify them)
The company operates in a sector that HMRC treats as excluded — financial activities, property development, certain leasing activities

An FD or CFO who has prepared advance assurance applications before knows which of these triggers to check before submission — and can significantly reduce the back-and-forth with HMRC that adds weeks to a fundraise.

Advance assurance timeline

HMRC’s published turnaround for advance assurance applications is 15 working days. In practice, complex applications or those with missing information often take four to eight weeks — particularly during busy periods around the tax year end. Budget for six weeks from submission to clearance, and submit well before you plan to open the round to investors.

Structuring Your EIS or SEIS Round: The Finance Director’s Role

Advance assurance is the gate, not the destination. Once you have HMRC’s approval in principle, there are a series of structural and legal decisions that an experienced CFO will guide you through — decisions that affect both your investors’ ability to claim relief and your company’s ongoing compliance obligations.

Share class structure

EIS and SEIS have specific rules about the type of shares that qualify. They must be ordinary shares with no preferential rights to assets on winding up, no preferential dividends and no right of redemption. Many standard VC term sheets include investor protections that need to be carefully reviewed against these requirements. An FD familiar with EIS structuring will know where the boundaries are and can work with your solicitors to ensure the share structure qualifies.

The investor subscription agreement

Investors will need to complete a subscription agreement that includes confirmation of their qualifying investor status. Some investors — particularly US-based angels — may not be UK taxpayers and therefore cannot benefit from EIS relief, a fact that is sometimes discovered awkwardly late in a round. An FD who has run international rounds will identify this early and structure the investor group accordingly.

Compliance statements: EIS1, SEIS1, EIS3 and SEIS3

After a qualifying share issue, the company must submit a compliance statement to HMRC (EIS1 for EIS, SEIS1 for SEIS). Once HMRC approves the statement, they issue compliance certificates to the company (EIS2/SEIS2), which the company then uses to issue individual tax relief certificates to each investor (EIS3/SEIS3). It is the EIS3 or SEIS3 that the investor uses to claim their income tax relief on their self-assessment return.

The compliance statement must be submitted after the shares have been issued and the money received. There is a two-year time limit from the end of the tax year in which the shares were issued, but most investors will want their certificates well within the same tax year — particularly if they are making the investment to reduce a specific tax liability. Managing this process promptly is an ongoing FD deliverable that many founders discover is more involved than they expected.

Post-Investment Obligations: What Your Finance Director Manages Ongoing

Closing the round is not the end of the EIS/SEIS process. There is a set of ongoing compliance obligations that the company must meet throughout the three-year investment period. Failing to meet them can cause investors to lose their tax reliefs — a serious outcome that will damage your relationship with them and your ability to raise from the same network in the future.

The three-year investment period

For both EIS and SEIS, the company must continue to trade in a qualifying activity for at least three years from the date of share issue (or, if later, three years from the commencement of trading). During this period:

The company must not issue any shares with preferential rights that would disqualify the EIS/SEIS shares
The company must not cease to be a qualifying company — for example, by being acquired in a way that triggers a disqualifying event
The funds raised must continue to be used for the qualifying purpose stated in the advance assurance application

Disqualifying events

A disqualifying event is any action that causes investors to lose their tax reliefs. The most common ones are:

The company receiving value from investors beyond what is permitted — loans, excessive remuneration, asset purchases at below market value
The company ceasing to carry on a qualifying trade
The company being acquired (though there are specific rules for qualifying reorganisations and share-for-share exchanges)
The company paying dividends during the investment period in a way that returns value to investors — a common trap for dividend-paying companies that receive EIS investment

An experienced FD will monitor the company’s activities against these rules on an ongoing basis and flag any proposed transactions — including fundraising rounds, acquisitions, employment arrangements and financial transactions — that could inadvertently trigger a disqualifying event.

Follow-on fundraising and EIS/SEIS interaction

If you raise SEIS first and then proceed to an EIS round, there are specific rules about timing and overlap. You cannot issue EIS shares in the same offering as SEIS shares, and there are restrictions on the period between the two raises. An FD who understands the interaction between the schemes will structure the sequencing to maximise the total amount you can raise under both.

Common EIS and SEIS Pitfalls — and How an Experienced CFO Prevents Them

The majority of EIS/SEIS problems are avoidable with the right finance support in place before and during the round. These are the most frequently encountered issues:

1. Starting investor conversations before advance assurance is in place

Investors who find out mid-process that advance assurance has not been applied for — or that there is a question mark over eligibility — frequently slow down or withdraw. Advance assurance should be in place, or at minimum submitted to HMRC, before investor conversations begin in earnest.

2. Financial projections that do not survive HMRC’s scrutiny

HMRC does not expect your projections to be accurate, but it does expect them to be coherent. Projections that show implausible growth without clear assumptions, or that are inconsistent with the business description in the application, will generate queries. A CFO builds projections that are stress-tested against both HMRC’s requirements and investor expectations.

3. Mixing qualifying and non-qualifying investors

US investors, investors who have previously provided a convertible note that could give rise to a commercial relationship, or investors with family connections to directors — all of these situations require careful review. Including a non-qualifying investor in an EIS/SEIS round can affect the reliefs available to other investors in the same round.

4. Delayed compliance statements

Investors expect to receive their EIS3 or SEIS3 certificates promptly. Delays in submitting the compliance statement to HMRC — often caused by the company being unclear about when exactly the qualifying trade commenced — are a common source of investor frustration post-round. An FD who has done this before will have the compliance statement process ready to go as soon as the shares are issued.

5. Inadvertent disqualifying events during the investment period

Management buyouts, new share issues to employees, changes in business activities, property purchases and certain director payments can all trigger disqualifying events if they are not checked against EIS/SEIS rules first. This is not a one-time compliance exercise — it requires someone who is actively monitoring the company’s activities throughout the three-year period.

EIS and SEIS alongside other funding sources

EIS and SEIS investment does not preclude other forms of funding, but the interaction between them needs to be managed carefully. Convertible loans from investors, Innovate UK grants, and RDEC/R&D tax credits all intersect with EIS/SEIS rules in ways that can affect eligibility. An FD who understands the full funding landscape will map these interactions before you commit to a structure.

How FD Capital Places EIS and SEIS-Experienced Finance Directors

EIS and SEIS fundraising is a specialist area within finance leadership. Not every Finance Director or CFO has run these processes, and the difference between someone who has and someone who has not is felt acutely during a live round. The advance assurance process, the investor negotiations, the compliance statement filings and the ongoing monitoring of the investment period are all tasks that benefit from prior experience.

FD Capital has placed Finance Directors and CFOs with early-stage and growth companies across the UK for over six years. Many of our candidates have direct experience of EIS and SEIS fundraises — from £150,000 SEIS angel rounds through to multi-million EIS series rounds with institutional co-investors. We understand what good looks like and we match companies with finance professionals who have done this specifically, not just broadly.

We place across all engagement models. Full-time Finance Directors for companies that are scaling quickly. Fractional FDs for companies that need senior finance expertise for a specific raise without the overhead of a permanent hire. Interim CFOs for businesses in the middle of a live round that need immediate, experienced support.

Our network includes CFOs and Finance Directors with experience of EIS fundraising in specific sectors — technology, SaaS, life sciences, fintech and clean energy — where the qualifying trade analysis and HMRC interactions are often more complex. See our pages on Finance Directors for Startups, Fractional CFO for PE and VC-Backed Companies, and our Fundraising and Transaction Support page for more on how we approach these mandates.

Hire an FD or CFO with EIS and SEIS Fundraising Experience

Raising EIS or SEIS investment involves far more than filing forms. Investors expect credible financial projections, a clear use-of-funds plan and a finance function that can demonstrate compliance throughout the investment period. FD Capital places Finance Directors and CFOs who have taken companies through EIS and SEIS fundraises — from advance assurance through to compliance statements and post-close investor reporting.

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EIS and SEIS Fundraising: The CFO’s Complete Guide