Two acronyms, one letter apart, and a surprising amount of money riding on which one a round qualifies for. SEIS and EIS are both UK government schemes designed to nudge private capital towards risky young companies by handing the investor a generous slice of tax relief. They share a family resemblance - and most of the confusion comes from treating them as interchangeable when they are not.
The short version: SEIS is the higher-relief scheme for the very earliest stage, with tight limits. EIS lowers the relief rate but lets you deploy far more capital into a wider band of companies. A given share issue qualifies under one or the other, not both. The rest is detail - but the detail is where the maths lives.
One letter apart on the page; a different deal on the cap table.
What are SEIS and EIS?
SEIS stands for the Seed Enterprise Investment Scheme. EIS is the Enterprise Investment Scheme. Both are administered by HMRC, and both work the same way at a high level: you buy newly issued shares in a qualifying unlisted company, hold them for a minimum period, and in return you can claim relief against your income tax bill, plus a set of capital gains and loss-relief benefits if things go well or badly.
The reliefs exist because the government wants more money flowing into British start-ups than the market would supply on its own. Early-stage companies are where the failure rate is highest, so the state effectively co-invests through the tax system, reducing the downside the investor carries. SEIS, launched in 2012, sits underneath EIS, which has run since 1994 and handles the slightly-less-embryonic end of the same market.
How much income tax relief do you get?
This is the headline difference, and it favours SEIS. Under SEIS you can claim 50% income tax relief on your investment, up to a maximum of £200,000 invested per tax year. Put £20,000 into a qualifying SEIS company and, assuming you have enough income tax liability to absorb it, you can knock £10,000 off your bill.
EIS relief is set lower, at 30%, but the ceiling is much higher: up to £1,000,000 invested per tax year, rising to £2,000,000 if at least £1,000,000 of that goes into knowledge-intensive companies - broadly, research-heavy businesses that meet HMRC's tests. So SEIS rewards you more per pound, while EIS lets you commit a great deal more capital. With both schemes the relief can be carried back to the previous tax year, which can help if your liability was larger then.
A point that trips people up: relief is capped by your own income tax bill. You cannot reclaim more tax than you actually owe. These reliefs are also generally only useful if you are a UK taxpayer.
Which companies qualify for each?
The reliefs are only as relevant as the companies that can use them, and this is where the two schemes properly separate. SEIS is deliberately narrow. To raise under it, a company must be trading for less than three years, have fewer than 25 full-time-equivalent employees, and hold gross assets under £350,000 at the time the shares are issued. The company can raise a total of £250,000 across its lifetime under SEIS. These are seed-stage businesses, often pre-revenue.
EIS is built for companies that have grown past those limits. The company-side EIS rules - gross-asset ceilings, the annual and lifetime amounts a firm can raise across all the venture capital schemes, the trading-age test and the more generous variations for knowledge-intensive companies - sit at a different order of magnitude, and some of them changed from 6 April 2026. As of the current HMRC guidance, an EIS company can hold up to £30m in gross assets before the share issue (and up to £35m immediately after), employ fewer than 250 people, must usually be within seven years of its first commercial sale, and can raise up to £10m a year and £24m over its lifetime across the schemes, with higher allowances for knowledge-intensive firms. Because these company-side figures shift and the detail is fiddly, confirm the current numbers in HMRC's guidance rather than relying on a round one: gov.uk venture capital schemes (EIS).
In practice many companies travel through both. A start-up raises its first money under SEIS, exhausts the £250,000 SEIS ceiling, then graduates to EIS for the rounds that follow. The schemes share a cap table happily; what they don't do is apply to the same shares at once. SEIS is generally used first.
Holding periods, capital gains and losses
On timing, the two schemes agree. Both demand a minimum holding period of three years. Sell or otherwise dispose of the shares before then and the income tax relief is clawed back. Three years is a tax floor, not a return timeline - meaningful exits in early-stage companies typically take far longer, and many never come.
Hold the shares for three years or more, having received income tax relief, and any gain on those shares is exempt from capital gains tax under both schemes. That is the same on each side.
Where they part company is on what you can do with a separate gain. SEIS offers reinvestment relief: reinvest a gain into SEIS shares and 50% of that gain can be exempted from capital gains tax, on up to £100,000 of investment a year. EIS instead offers deferral relief: you can postpone the tax on another gain by reinvesting it into EIS shares. The distinction matters - SEIS can write off half the gain for good, while EIS defers the bill rather than cancelling it.
Both schemes also carry loss relief. If a holding fails, you can set the loss - after accounting for the income tax relief already claimed - against income or capital gains, softening the hit. Loss relief is one of the most under-appreciated features of both schemes, and it is part of why the after-tax downside on a qualifying investment is narrower than the gross figure suggests.
How do SEIS and EIS compare to a VCT?
It is worth drawing the line clearly, because Venture Capital Trusts get lumped in with SEIS and EIS and behave quite differently. A VCT is a listed fund you buy into, rather than a direct stake in a company you choose. It carries 20% income tax relief on up to £200,000 a year, a longer five-year minimum hold, tax-free dividends and no capital gains tax on gains - but, unlike SEIS and EIS, no loss relief. Lower relief, more diversification, less control, and a different risk shape.
The plumbing: assurance and certificates
Whichever scheme applies, the mechanics are the same. Sensible companies obtain advance assurance from HMRC before the round - a pre-check that the business looks eligible - which gives investors confidence the relief should be available. After the shares are issued and the qualifying conditions met, the company issues an SEIS3 or EIS3 certificate. That certificate is what you use to actually claim the relief on your tax return. No certificate, no claim. The official investor guidance lives on gov.uk.
So which one matters for an investor?
That depends entirely on the round in front of you, and it isn't really your choice to make - it's set by the company's stage and the conditions it meets. A pre-seed company will almost always be offering SEIS up to its limit, then EIS beyond it. The practical job for an investor is reading which scheme a given share issue falls under, understanding what relief that brings, and checking the certificate arrives. The headline trade-off rarely changes: SEIS, more relief on less money, earliest stage; EIS, less relief on more money, a wider field.
One caveat worth stating plainly. None of the above is a recommendation to put money into either scheme. Tax relief reduces risk; it does not remove it, and the underlying companies are still among the most likely investments you can make to lose the lot. The reliefs depend on your personal tax position and on rules that change with each Budget. This piece is general information, not financial or investment advice - take FCA-regulated advice before you commit capital.
Frequently asked questions
What is the main difference between SEIS and EIS?
SEIS, the Seed Enterprise Investment Scheme, targets very young companies and gives investors 50% income tax relief on up to £200,000 invested per tax year. EIS, the Enterprise Investment Scheme, is for slightly larger and older companies and gives 30% income tax relief on up to £1,000,000 per tax year, or £2,000,000 if at least £1,000,000 goes into knowledge-intensive companies. SEIS is the higher-relief, earlier-stage scheme; EIS lets you put far more capital to work at a lower relief rate. Both require a three-year minimum hold.
Can a company use both SEIS and EIS?
Yes, and many do, but usually in sequence rather than for the same shares. A company commonly raises its first money under SEIS, up to the £250,000 SEIS lifetime limit, then moves to EIS for later rounds once it has outgrown the SEIS company conditions. The schemes can sit on the same cap table, but a single share issue qualifies under one scheme, not both, and SEIS must generally be used first.
How long do you have to hold SEIS and EIS shares?
Both schemes require a minimum holding period of three years from the date the shares are issued, or from when the company starts trading if that is later. Sell or dispose of the shares before three years and the income tax relief is clawed back. The capital gains exemption on a profitable disposal also depends on having held the shares for at least three years and having received income tax relief. Three years is the tax floor, not a realistic timeline for an exit.
Do you get capital gains tax relief under SEIS and EIS?
Both schemes exempt gains on the shares themselves from capital gains tax if you have held them for at least three years and received income tax relief. They differ on reinvestment. SEIS offers reinvestment relief that exempts 50% of a separate gain you reinvest into SEIS shares, on up to £100,000 of investment a year. EIS instead offers deferral relief, which lets you postpone capital gains tax on another gain by reinvesting it into EIS shares, rather than exempting it outright.
Are SEIS and EIS the same as a VCT?
No. A Venture Capital Trust is a listed fund you buy shares in, rather than backing companies directly. A VCT carries 20% income tax relief on up to £200,000 a year, a five-year minimum hold, tax-free dividends and no capital gains tax on gains, but no loss relief. SEIS and EIS are direct investments into individual unlisted companies, with higher relief rates, three-year holds and loss relief available. This article is general information, not financial advice.