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Tax incentive
Tax incentiveStartupHMRC

Seed Enterprise Investment Scheme (SEIS)

SEIS is a UK government tax-incentive scheme that lets very early-stage companies raise up to £250,000 of equity from individual investors, who in turn receive substantial income tax, capital gains and loss-relief benefits. It is the single most generous personal-tax incentive in the UK and is the default first equity instrument for pre-revenue or just-trading startups.

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Quick answer

SEIS is a personal-tax-incentive wrapper that makes it dramatically easier for UK startups under three years old, with under £350k of gross assets and fewer than 25 employees, to raise their first £250k of equity from angels and friends-and-family. Investors receive 50% income-tax relief and CGT exemption on qualifying shares held for three years. The company must hold Advance Assurance and meet trading, independence and qualifying-activity tests. Most UK seed rounds run SEIS-then-EIS.

Funding amount

Up to £250k raised

Region

United Kingdom

Stage

Startup

Provider

HMRC

Advisor view

Treat SEIS as the first formal step on the equity ladder — its real value is investor confidence and downside protection, not the cash itself. Most healthy SEIS rounds are oversubscribed because the tax incentive does the selling.

Frequently asked questions

What is SEIS?
SEIS (the Seed Enterprise Investment Scheme) is the UK's earliest-stage equity tax relief. It is designed for very early-stage UK trading companies raising their first risk-finance capital from angels, accelerators or SEIS funds, with investors receiving 50% income-tax relief on qualifying shares.
Who is SEIS for?
Very early-stage UK trading companies under 3 years of first commercial sale, under 25 employees and under £350k gross assets, raising up to £250k of lifetime SEIS investment.
Why is SEIS so popular with angels?
Because investors receive 50% income-tax relief — the highest in the UK system — plus CGT exemption on qualifying shares held three years. That makes the after-tax economics very attractive.
Does the company receive the SEIS relief?
No. SEIS is an investor-side relief. The company does not receive a cash subsidy — the relief lands with the investor.
Is Advance Assurance required?
Advance Assurance is not strictly mandatory but is the safest path — it confirms HMRC's view of the company's eligibility before shares are issued and protects investors' relief.
What are the most common reasons SEIS fails?
Issuing shares before Advance Assurance, using the wrong share class, prior risk-finance investment that breaks SEIS rules, connected investors, or breaches of the age, size and trade tests.
Can the same share carry both SEIS and EIS relief?
No. Each share is wrapped in only one scheme. Companies typically fill SEIS headroom first and then open an EIS top-up on separate shares in the same round.
When can we file SEIS1?
After the company has been trading for 4 months or has spent 70% of the capital on qualifying activities, whichever is earlier. HMRC then issues SEIS2 and SEIS3 certificates for investors.
What comes after SEIS?
Most companies move on to an EIS round once SEIS headroom is exhausted. EIS is the structural continuation of SEIS, not a separate event.
Where are the official rules?
The official guidance is on gov.uk under 'Venture capital schemes — apply for the Seed Enterprise Investment Scheme'. Confirm current rules with a specialist accountant before issuing shares.

Who it's for

UK-incorporated companies under ~3 years of trading, fewer than 25 full-time-equivalent employees and under £350,000 of gross assets that intend to raise their first equity round from individual investors.

Probably not for you if…

Companies with prior VC investment, group structures, more mature businesses, or anyone hoping to raise from corporate or institutional investors — SEIS only benefits individual UK taxpayers.

Usually too early when

Advisor signal

You have not yet incorporated, do not have a UK bank account, or have no credible use-of-funds plan — Advance Assurance reviewers want to see a real company, not just an idea.

Eligibility

UK trading company; under 3 years trading; <25 FTE; <£350k gross assets; qualifying trade; max £250,000 lifetime SEIS raise; investors must be unconnected individual UK taxpayers.

Evidence you'll need

Articles, cap table, board approval for the share issue, business plan showing use of funds, accountant-prepared advance assurance pack and SEIS1 compliance statement post-issue.

Application timeline

Advance Assurance typically 4–8 weeks. SEIS1 compliance statement can only be filed after 4 months of trading or after spending 70% of the funds. SEIS3 certificates to investors usually 2–6 weeks after HMRC approval.

Common reasons applications fail

Raising too late (after the 3-year window), accidentally tripping the gross-assets test, issuing shares before Advance Assurance, mixing SEIS and EIS share classes incorrectly, or investors becoming "connected" via directorships/family.

What improves your odds

Clean cap table, no prior institutional investment, a UK-resident director, a clear qualifying-trade description, and a named lead investor already soft-circled.

Typical successful applicant

A 6–18-month-old UK tech, deep-tech or consumer startup raising £150k–£250k from 3–10 angel investors, often alongside a small SEIS fund.

Common misconceptions

SEIS is not a grant and not government money — it is a tax wrapper that makes private investors more willing to back you. The company receives no funds from HMRC.

What happens next

After Advance Assurance you can market the round; once shares are issued and the 4-month / 70% test is met you file SEIS1; HMRC issues SEIS2 to the company and SEIS3 certificates for each investor to claim relief.

What comes next

After exhausting the £250k SEIS allowance the same company normally moves to EIS for its next equity round, and may pursue Innovate UK Smart Grants or Innovation Loans in parallel for non-dilutive R&D capital.

Funding context

SEIS is the entry rung of the UK equity ladder and is almost always used before EIS. It is complementary to — not a substitute for — innovation grants such as Innovate UK Smart Grants.

Related routes

Editorial status: Advisor Reviewed

Source: https://www.gov.uk/guidance/venture-capital-schemes-apply-for-the-seed-enterprise-investment-scheme

Last editorial review: 6/14/2026

Conservative note: SEIS rules and limits are set in UK tax legislation and can change at Budget; always confirm the current thresholds with a SEIS-specialist accountant before issuing shares. This is not tax or investment advice.

FundingAtlas is independent. Always verify details on the official scheme page before applying.