For many UK startups, the alphabet soup of investment schemes can be confusing — especially when you’re trying to raise your first round and everyone keeps asking, “Is this SEIS or EIS?”

Both are government-backed venture capital schemes that reward investors for backing early-stage British companies. Both can transform a small business’s fundraising prospects. But they’re not the same — and knowing the difference can make or break your round.

The shared DNA: tax-efficient capital for growth

Both the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are designed to make investing in early-stage companies less risky.

In return for backing startups, investors get major tax perks — income tax relief, Capital Gains Tax (CGT) exemptions, and loss relief if things don’t go to plan.

For founders, that means your company becomes much more attractive to private investors who want exposure to innovation but with a softer landing if it goes wrong.

But the key difference is where you are in your growth journey.

SEIS: built for the true early stage

Think of SEIS as your first-gear funding scheme — it’s for the idea-stage, prototype-stage, or “friends-and-family” round.

• You can raise up to £250,000 total under SEIS (HMRC official limit).
  
  
• Your company must be under 3 years old, with fewer than 25 full-time staff and no more than £350,000 in gross assets.
  
  
• You must be UK-based, carrying on (or preparing to carry on) a new qualifying trade.
  
  
• Investors can claim 50% income tax relief on up to £200,000 per tax year.
  
  
• If they hold the shares for 3 years, any capital gains are CGT-free — and losses can be offset against other income.
  
  

For many founders, SEIS is the tool that gets the engine started.
It’s tailor-made for those still building proof-of-concepts or trying to fund early hires.

As one London-based angel told us recently, “Without SEIS, 90% of my earliest deals wouldn’t have happened.”

EIS: for scaling and serious growth

Once you’ve outgrown SEIS, EIS becomes your next stop.
It’s designed for companies that have traction, customers, or revenue — but still need growth capital.

Here’s how it stacks up:

• You can raise up to £12 million in total through EIS — or £20 million if you’re a “knowledge-intensive” company (source: HMRC EIS rules).
  
  
• You can raise up to £5 million per year.
  
  
• The company must be less than 7 years old (10 years if knowledge-intensive).
  
  
• You can have up to 250 employees and gross assets of up to £15 million before investment.
  
  
• Investors receive 30% income tax relief, plus CGT-free growth after 3 years.
  
  
• There’s no limit on how many investors can take part.
  
  

In practice, EIS bridges the gap between early angels and institutional capital — it’s often used in seed and Series A rounds to bring in larger cheques from wealth managers, syndicates, or family offices.

Key differences at a glance

Who can’t qualify

Both schemes have tight boundaries. HMRC excludes “low-risk” or subsidised sectors such as:

• Financial services, property development, energy generation, farming, legal and accounting services (excluded list here).
  
  
• Businesses dealing in land, shares, or securities.
  
  
• Any company listed on a recognised stock exchange, or with arrangements to become one.
  
  

If you’ve already raised EIS or VCT funds, you can’t then issue SEIS shares — SEIS must always come first.

Advance Assurance: your investors’ confidence badge

Before raising under either scheme, it’s smart to apply for Advance Assurance from HMRC.

It’s effectively a pre-approval letter that signals your company and funding structure are likely to qualify. Most savvy angels won’t write a cheque without seeing it.

If you’re not sure where to start, the British Business Bank’s guide to SEIS and EIS breaks down how to prepare your documents and when to apply.

The bottom line

For early-stage founders, SEIS is the foot in the door — the spark that gets investors interested. EIS, meanwhile, fuels the next phase: scaling the business, hiring fast, and expanding into new markets.

Both are cornerstones of the UK’s startup ecosystem, helping thousands of SMEs every year unlock the capital they need to grow.

Handled right, they’re not just acronyms — they’re the foundation of your fundraising story.

Further reading:

• HMRC SEIS Guidance
  
  
• HMRC EIS Guidance
  
  
• British Business Bank – EIS & SEIS overview
  
  
• Start Up Loans – SEIS Explained
  
  

‍