07 May, 2020 03:28 PM
Admin Category: Business Advice,

The Diverse Aspects of EIS and SEIS

We have come up with the difference of Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) including how they work for your business

The start-ups in the UK is a blooming market for the economy. Statistics show that London alone has the highest rate of 105 startups per 10,000 population in 2018. The start-up environment is thriving with new entrepreneurs and small business owners with their brilliant new ideas. But the scenario of attracting capital and confidence among the SMEs are falling short for the past four years. To keep the fundraising environment stable and attractive for SME investors, the UK government designed the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)

If you are looking for ways to raise funds for your start-up, you’ll want to make yourself more investible. The government schemes will help you in your way to attract investors so you need to be more informative about those initiatives. To guide you through, Taj Accountants has come up with today’s content. 


Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are both designed to encourage greater levels of investment for SMEs. These schemes offer tax relief to investors who are willing to invest in your business. Both of the schemes share the same motive while having differences of their own. 


The Enterprise Investment Scheme (EIS) is one of 4 venture capital schemes of the UK government. This scheme allows you to raise money for your business by offering tax reliefs to individual investors who’d buy new shares of your company. It aims to work with a larger scale of investors offering 30% Tax Relief by holding tax for 3 years after the investment is made. Each year one investor can invest up to a maximum of £1m in your business. This scheme allows you to raise up to £5 million each year from investors, and a maximum of £12 or £15 million in your company’s lifetime. You can receive investment under EIS as long as it’s within 7 years of your company’s first commercial sale, you own £15 million assets and employ a maximum of 250 full-time equivalent employees at the time the shares are issued. 

With this scheme, investors can exempt from Capital Gains Tax (CGT) gain made from the sale of their share after holding them for 3 years. Investors are also allowed to defer up to 100% of their investment amount against any CGT incurred up to 1 year before or 3 years after disposal. In this case, shares are inheritance tax (IHT) free for an initial period of more than 2 years and for loss on shares can be offset against CGT or Income Tax. The investor can carry back partial or all of the investment in the preceding year they invested.


Seed Enterprise Investment Scheme (SEIS) was launched in 2012 after the The Enterprise Investment Scheme (EIS). This scheme was designed to support the early stage businesses offering significantly greater Income Tax relief of 50% against the amount invested. SEIS has both a higher tax relief rate and riskier than EIS. Under this scheme, Investors can get tax relief benefits of up to £100,000 each year with a lifetime cap of £150,000. To be eligible for this scheme your business must be operating for 2 years, you own assets of a maximum amount of £200,000 and employ less than 25 people.

The scheme allows Capital Gains Tax (CGT) exemption on any gain from the sale of your shares if they have held them for 3 years with 50% write-off of the investment in the same tax year. The shares are generally inheritance tax (IHT) free as long as the shares are held for an initial period of over 2 years and if the shares are sold at a loss, investors can offset this against CGT or Income Tax. Like EIS, here the investors can also carry back partial or all of the investment in the preceding year they invested. 

To calculate the figures and to estimate the amounts mentioned above, contact your local accountant in London or Taj Accountants in East London

Key Differences 

Area of focus: SEIS is focused on very early-staged companies whereas EIS is focused on a larger scale of investors. 

Tax Relief Rate: 30% for EIS and 50% for SEIS

Risk Scale: SEIS obtains greater risk than EIS for investors

Business Operation Duration: More than 7 years under EIS and less than 2 years under SEIS

Employee Limit:  Maximum 250 for EIS and 25 for SEIS.

Updates of the Schemes

The schemes have been updated in both the 2017 and 2018 annual budgets. A quarterly update of the Enterprise and Seed Enterprise Investment Schemes (SEIS) statistics took place on 28th April 2016. The latest update recites that the rules for EIS will be refocusing towards the growth-based investment rather than just a form of tax relief.

Utilizing the Schemes

Businesses are rapidly obtaining both schemes for their business growth. Data shows that in 2016-2017 around 3,470 companies raised 1.8bn of funds for their businesses. It means investors are willing to take risk for your business and you should too. If you are still not working on filing your schemes then you should hurry up. There is a 4 month or 70% rule for SEIS companies before applying for full SEIS clearance so look for small business accountants in your area to help you out. Taj Accountants encourages you to grab the opportunity and get your fundraising now.  

How Taj Accountants Can Help You

Investor negotiation could be challenging at times, especially when it comes to start-ups. Taj Accountants provide you with the right consultancy with the right documents of the right investors. We take each case with care and we abide by the HMRC rules and regulations. We aim to maximize your profit in all aspects and help you with the newest technological solution at an affordable price. Contact us for solving your accounts and taxation problems. 

DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you to contact Taj Accountants for further assistance.

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