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SEIS & EIS Guide: FAQs, Advance Assurance & Investor Tax Benefits

​The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are UK government initiatives designed to encourage investment in early-stage companies by offering tax reliefs to individual investors. Below is a compilation of frequently asked questions to help you understand these schemes better. If you still need personalised advice or support, you can book a call with our SEIE/EIS tax experts.

UK SEIS/EIS FAQs

  • SEIS and EIS are tax incentive schemes aimed at encouraging investment in qualifying start-ups and early-stage companies in the UK. SEIS focuses on very early-stage companies, while EIS targets more established businesses seeking growth capital.

    • Stage of Company: SEIS is designed for start-ups and early-stage companies, whereas EIS is intended for more established businesses.​

    • Investment Limits: Under SEIS, companies can raise up to £150,000, while EIS allows companies to raise up to £12 million over the company's lifetime.​

    • Investor Tax Reliefs: SEIS offers 50% income tax relief on investments up to £100,000 per tax year, whereas EIS provides 30% income tax relief on investments up to £1 million per tax year.

    • Income Tax Relief: SEIS offers 50% income tax relief on the amount invested, while EIS provides 30% relief.​

    • Capital Gains Tax (CGT) Exemption: Both schemes offer exemption from CGT on gains realized from the sale of shares, provided they have been held for at least three years.

    • Loss Relief: If the investment results in a loss, investors can offset the loss against their income tax.

    • Inheritance Tax Relief: Shares held for at least two years may qualify for 100% relief from inheritance tax.

  • Individual investors who are UK taxpayers can invest under both schemes. However, investors must not be connected to the company, meaning they should not hold more than a 30% interest in the company, and they should not be employees of the company.

  • Directors can invest in their own companies and claim SEIS/EIS relief, provided they meet certain conditions. For instance, they must not be employees of the company and must not hold more than a 30% interest in the company.

  • To qualify for SEIS, a company must have been trading for less than two years, have gross assets of less than £200,000, and employ fewer than 25 full-time employees. For EIS, the company must have been trading for less than seven years, have gross assets of less than £15 million, and employ fewer than 250 full-time employees.

  • Companies can apply for SEIS/EIS by submitting an application to HMRC, including details such as how much they plan to raise, financial forecasts, a business plan, and recent accounts. It's advisable to seek advance assurance from HMRC before offering shares to investors.

  • The processing time for SEIS/EIS applications can vary. It's recommended to check directly with HMRC or consult with professionals experienced in the application process for the most accurate timelines.

  • Yes, friends and family can invest in your company under SEIS/EIS, provided they are not connected to the company in a way that would disqualify them, such as being employees or holding more than a 30% interest. ​

  • For comprehensive guidance, you can refer to HMRC's official resources or consult with SEIE/EIS tax advisors at Dragon Argent who specialises in these schemes.

Advance Assurance Application FAQs

  • Advance Assurance is an optional process where a company applies to HMRC for confirmation that it meets the eligibility criteria for SEIS/EIS before seeking investment. It provides investors with confidence that their investment is likely to qualify for tax relief.

    • It reassures potential investors that your company is eligible for SEIS/EIS tax relief.

    • Some investors may require Advance Assurance before committing funds.

    • It helps identify any compliance issues before issuing shares.

  • Any UK-based company intending to raise investment under SEIS/EIS can apply. However, you must have a business plan and intend to use the funds for growth. If your company has already issued SEIS/EIS shares, you must ensure you have room within the investment limits.

  • You need to submit an application to HMRC, including:

    • A detailed business plan

    • A financial forecast (typically for 3 years)

    • A description of how the funds will be used

    • Company details (registration number, incorporation certificate, etc.)

    • Investor details (if known)

    • Latest accounts (if available)

  • HMRC typically processes Advance Assurance applications within 4-6 weeks, but it can take longer during busy periods.

  • Yes, you can apply for both schemes simultaneously if you plan to raise SEIS funds first and then EIS funds later. You must clearly outline the investment sequence in your application.

    • Insufficient details in the business plan

    • The company does not meet the trading activity requirements

    • SEIS/EIS funds are not being used for qualifying business purposes

    • The company is deemed to be low risk or asset-backed (e.g., property investment, financial services, etc.)

    • Lack of potential investors (HMRC sometimes requires evidence of interest)

  • Yes, if your application is rejected, HMRC will usually provide reasons. You can address the issues and resubmit the application.

  • No, Advance Assurance is not legally binding. HMRC can still reject an SEIS/EIS claim later if the company’s circumstances change or if the final investment structure does not align with the assurance granted.

  • No, but using a professional can improve your chances of a successful application, especially if your company structure or funding plans are complex.

  • There is no official expiration date, but if there are major changes to your business plan or company structure, you may need to reapply before seeking investment.

  • Once you receive confirmation, you can show this to potential investors. After investment, you must issue shares and submit a compliance statement (SEIS1/EIS1) to HMRC to formally grant tax relief to investors.

  • Yes, but investors may be hesitant to invest without confirmation that your company qualifies. It is strongly recommended to secure Advance Assurance first.

  • Yes, but HMRC prefers applications that include potential investor details. If you don’t have investors yet, you may need to provide additional justifications for your application.

  • There is no application fee for Advance Assurance when applying directly to HMRC. However, if you hire a professional (such as an accountant or legal expert), there may be associated costs.

  • Your UTR (Unique Taxpayer Reference) number is a 10-digit code issued by HMRC (HM Revenue & Customs) in the UK. Here’s where you can find it:

    Where to Find Your UTR Number?

    1. HMRC Correspondence

    Your UTR is usually found on:
    ✅ Your Self Assessment welcome letter (SA250)
    ✅ HMRC tax return reminders or notices to file
    ✅ Any Self Assessment tax calculation letter
    ✅ Your Corporation Tax documents (if you own a company)

    2. Online via HMRC Account

    1. Log in to your HMRC Government Gateway account: https://www.gov.uk/log-in-register-hmrc-online-services

    2. Navigate to the Self Assessment or Corporation Tax section.

    3. Your UTR will be displayed in your account.

    3. On Your Personal Tax Account

    If you’ve set up a Personal Tax Account, you can log in and check your UTR under the tax details section.

    4. PAYE and Tax Return Documents

    If you’ve filed tax returns in the past, check your previous SA100 tax return forms or PAYE documents.

    5. Contact HMRC

    If you cannot find your UTR, you can call HMRC’s Self Assessment Helpline:
    📞 Telephone (UK): 0300 200 3310
    📞 Telephone (Outside UK): +44 161 931 9070

    ✅ Before calling, ensure you have:

    • Your National Insurance (NI) number

    • Your personal details (name, DOB, address)

    • Your company details (if applicable)

    Can I Get My UTR Number Instantly?

    No, HMRC usually sends UTR numbers by post within 10 days (UK) or 21 days (abroad) if you’ve just registered for Self Assessment.

EIS FAQs for Knowledge Intensive Companies (KIC)

  • A Knowledge Intensive Company (KIC) is a business that meets specific criteria set by HMRC, indicating that it heavily invests in innovation, R&D, or highly skilled employees.

  • KICs receive special benefits under EIS, including:
    ✅ A higher annual investment limit (£10 million vs. £5 million for standard companies)
    ✅ A higher lifetime funding limit (£20 million vs. £12 million)
    ✅ A longer qualification period (10 years instead of 7 years)
    ✅ Flexibility in when investment can be raised

  • A company must meet at least one of the following tests:

    Innovation Test

    • At least 15% of operating costs spent on R&D in at least one of the last 3 years, or

    • At least 10% of operating costs spent on R&D in each of the last 3 years

    Skilled Employee Test

    • At least 20% of employees must be highly skilled workers engaged in R&D with a master’s degree or higher

  • Sectors that often qualify include:

    • Technology & Software Development

    • Biotechnology & Pharmaceuticals

    • Medical Research & Healthcare Innovations

    • Engineering & Advanced Manufacturing

    • AI, Robotics, and Fintech Innovations

  • For standard EIS, companies must raise funds within 7 years of their first commercial sale. However, KICs have 10 years, allowing them to secure investment for a longer period.

  • Yes, if the company is within its first 3 years of trading, it may qualify for SEIS before moving on to EIS. However, the standard SEIS limits apply.

  • To apply as a KIC under EIS, a company must provide:
    ✅ Business Plan outlining research, development, and innovation
    ✅ Financial Forecasts showing R&D expenses
    ✅ Employee Details proving the percentage of highly skilled staff
    ✅ R&D Expense Breakdown

  • Yes, a Knowledge Intensive Company can apply for Advance Assurance from HMRC to confirm its eligibility for EIS tax relief before raising investment.

  • No, the tax reliefs (such as 30% income tax relief, capital gains tax exemption, and loss relief) remain the same as standard EIS. However, the higher investment limits make it more attractive for investors.

  • KIC status is assessed as part of an EIS Advance Assurance application or when submitting an EIS Compliance Statement (EIS1) after issuing shares.

SEIS & EIS FAQs for Foreign / Non-UK Companies

  • No, only UK-registered companies can qualify for SEIS/EIS. The company must have a permanent establishment in the UK, meaning it should either be incorporated in the UK or have a UK branch that carries out a significant part of its trade.

  • Yes, but the UK subsidiary must:

    • Be a qualifying trading company with its main operations in the UK.

    • Raise funds for UK-based business activities.

    • Meet all the standard SEIS/EIS eligibility criteria, including the risk-to-capital condition.

  • Yes, the nationality of shareholders does not affect a company’s eligibility. However, investors must be UK taxpayers to claim SEIS/EIS tax reliefs.

  • No, SEIS/EIS funds must be used for UK-based business activities. If a company intends to use funds to expand overseas, it may lose eligibility for SEIS/EIS.

  • Only UK taxpayers can claim SEIS/EIS tax benefits. If an investor is based overseas, they won’t benefit unless they pay UK income tax. Some countries may allow similar tax reliefs, but this depends on their local tax laws.

  • Yes, as long as the company has a UK-based permanent establishment and the majority of its business activities occur in the UK. Companies that are purely operating overseas will not qualify.

  • No, if a company moves its main operations abroad within three years, it could lose SEIS/EIS status, and investors may have their tax relief withdrawn.

  • Brexit has no direct impact on SEIS/EIS eligibility. However, state aid rules are still considered when determining funding limits, and some changes in international trade may impact future eligibility criteria.

  • A foreign business can:

    • Register a UK subsidiary and ensure it meets SEIS/EIS conditions.

    • Ensure a significant part of the trade is carried out in the UK.

    • Seek Advance Assurance from HMRC before raising SEIS/EIS funds.

FAQs for SEIS/EIS Pitch Deck & Business Plan

  • Your pitch deck should clearly showcase your business's growth potential while meeting SEIS/EIS eligibility requirements. Key slides include:

    ✅ Problem & Solution – What gap in the market does your business address?
    ✅ Market Opportunity – Size, demand, and growth potential.
    ✅ Business Model – How does your company generate revenue?
    ✅ SEIS/EIS Eligibility Statement – Confirm you meet HMRC requirements.
    ✅ Use of Funds – Breakdown of how investment will be spent (must align with SEIS/EIS rules).
    ✅ Team & Advisors – Founders, key employees, and any industry experts.
    ✅ Exit Strategy – How investors will get a return (e.g., acquisition, IPO).

    In addition, HMRC has made some business plan templates available.

  • Investors want assurance that the company qualifies for SEIS/EIS and will maximize their tax benefits. Your business plan should include:

    ✅ Advance Assurance Status – Mention if you've applied for or received it from HMRC.
    ✅ Risk-to-Capital Condition – Show that the investment is at risk and aimed at business growth.
    ✅ Qualifying Trade – Confirm that your business operates in an approved sector.
    ✅ Financial Projections – Ensure they are realistic and align with SEIS/EIS funding limits.
    ✅ Funding Rounds – Detail any past or future funding plans.

  • Your financial section should be clear but not overly detailed—investors need to see growth potential without being overwhelmed. Include:

    📊 Revenue & Cost Projections – Show realistic forecasts for at least 3-5 years.
    📊 Break-even Analysis – When will you become profitable?
    📊 Exit Strategy – Mergers, acquisitions, IPO, or secondary market sales.

    For EIS, investors typically look for a 3-5x return in 5-7 years, so align projections accordingly.

  • While not legally required, Advance Assurance from HMRC increases credibility and reassures investors that your company qualifies for SEIS/EIS. Many investors will not commit without it.

  • 💡 Angel Investors (SEIS/EIS)

    • More interested in tax relief and early-stage growth potential.

    • Prefer a personal connection with the founding team.

    • Looking for clear exit plans within 5-7 years.

    💼 Venture Capitalists (VCs)

    • Focus more on scalability & long-term growth.

    • Less concerned about SEIS/EIS tax relief.

    • Want strong financial projections and competitive advantages.

FAQs on SEIS & Capital Gains Tax (CGT) + Loss Relief

  • SEIS offers two key CGT benefits:

    ✅ CGT Reinvestment Relief – If you reinvest a capital gain into SEIS shares, 50% of that gain is exempt from CGT.

    ✅ CGT Exemption on Growth – If you hold SEIS shares for at least 3 years and meet the conditions, any gain on disposal is completely tax-free.

  • No, SEIS CGT Reinvestment Relief only applies to capital gains from disposal of chargeable assets, such as stocks, crypto, or other investments—not residential property.

  • If your SEIS investment fails, you can claim Loss Relief, which allows you to offset the loss against:

    ✅ Income Tax – Deduct the loss from your income tax bill.

    ✅ Capital Gains Tax (CGT) – Offset the loss against other capital gains in the same or future tax years.

    Example:

    • You invest £10,000 in SEIS shares.

    • You already claimed 50% income tax relief (£5,000).

    • If the company fails, your net loss is £5,000.

    • If you're a 45% taxpayer, you can claim £2,250 in Loss Relief (45% of £5,000).

    • Your actual loss is now only £2,750 instead of £10,000.

  • You can claim Loss Relief:

    🔹 In the tax year the company fails (when shares become worthless).
    🔹 Through Self Assessment, under "Capital Gains & Losses" or "Employment & Self Employment Income".
    🔹 By carrying the loss back to a previous tax year if beneficial.

  • Yes! SEIS is highly tax-efficient because:

    ✔️ You first claim 50% Income Tax Relief on your investment.
    ✔️ If the company fails, you claim Loss Relief on the remaining amount.

    This significantly reduces risk, making SEIS investments attractive even in high-risk startups.

    📌 Need Help?

    1. Call HMRC Self Assessment Helpline: 📞 0300 200 3310

    2. Speak to an accountant or tax advisor at Dragon Argent for complex claims.

SEIS / EIS Glossary

  1. Advance Assurance – A voluntary application to HMRC where a company seeks confirmation that it qualifies for SEIS/EIS before raising investment.

  2. Business Activity Test – A requirement that a company must be engaged in a qualifying trade to be eligible for SEIS/EIS.

  3. Capital Gains Tax (CGT) Exemption – A tax relief allowing investors to be exempt from CGT on profits from the sale of SEIS/EIS shares held for at least three years.

  4. Compliance Statement (SEIS1/EIS1) – A document submitted to HMRC after investment to formally confirm that shares issued qualify for SEIS/EIS tax relief.

  5. Disqualifying Event – An event that can cause a company or an investor to lose SEIS/EIS tax reliefs, such as breaching the 3-year shareholding rule.

  6. Directors’ Investments – SEIS/EIS rules allow directors to invest in their own company, but they must not be employees (except for unpaid directors).

  7. Eligible Shares – Ordinary shares with no preferential rights, issued to investors under SEIS/EIS.

  8. Enterprise Investment Scheme (EIS) – A UK government scheme designed to encourage investment in higher-risk early-stage businesses by offering tax reliefs to investors.

  9. Financial Forecasts – A required document in Advance Assurance applications that outlines a company’s revenue and expenditure projections.

  10. Full-Time Equivalent (FTE) Employees – A measure of company size for EIS qualification (must have fewer than 250 FTE employees).

  11. Gross Assets Test – A requirement that a company must have gross assets below £200,000 (for SEIS) or £15 million (for EIS) at the time of investment.

  12. HMRC Compliance Check – A review by HMRC to ensure a company and its investors meet the SEIS/EIS qualification criteria.

  13. Income Tax Relief – A key SEIS/EIS benefit that allows investors to claim back a percentage of their investment (50% for SEIS, 30% for EIS) against their income tax.

  14. Investment Limit – The maximum amount a company can raise: £250,000 for SEIS and £12 million for EIS (including any previous state aid funding).

  15. Inheritance Tax (IHT) Relief – SEIS/EIS shares may qualify for 100% relief from IHT if held for at least two years.

  16. Loss Relief – If an SEIS/EIS investment results in a loss, the investor can offset the loss against their income tax or capital gains tax.

  17. Maximum Age Condition – To qualify for EIS, a company must be less than seven years old (or 10 years in some cases) from the date of first commercial sale.

  18. Ordinary Shares – The only type of shares that qualify for SEIS/EIS; they must not carry preferential rights to dividends or capital.

  19. Pre-Approval Process – Another term for Advance Assurance, where HMRC reviews a company’s eligibility before investment.

  20. Preference Shares – Shares that provide priority over ordinary shares in dividends or liquidation, which do not qualify for SEIS/EIS.

  21. Qualifying Business Activity – A trade that is eligible under SEIS/EIS rules, excluding activities such as financial services, property development, and legal services.

  22. Qualifying Holding Period – Investors must hold SEIS/EIS shares for at least three years to retain tax relief benefits.

  23. Risk-to-Capital Condition – A requirement that SEIS/EIS investments must involve a genuine financial risk and be intended for business growth, rather than just providing investors with tax benefits.

  24. Seed Enterprise Investment Scheme (SEIS) – A UK government scheme offering tax relief to investors in very early-stage start-ups.

  25. State Aid Rules – SEIS/EIS are considered a form of state aid under EU/UK regulations, which limits how much funding a company can receive.

  26. Subscription for Shares – The process where investors purchase shares in a company under SEIS/EIS rules.

  27. Three-Year Rule – Investors must hold SEIS/EIS shares for at least three years to benefit from full tax reliefs.

  28. Trade Commencement Date – The official date when a company starts its qualifying trade, relevant for determining eligibility.

  29. VCT (Venture Capital Trusts) – A similar UK government-backed investment scheme, but targeted at more established companies.

  30. Withdrawal of Tax Relief – If SEIS/EIS conditions are breached, investors may lose their tax relief benefits, and HMRC may reclaim previous reliefs granted.

Our Experienced SEIS/EIS Team

Misha Patel

Head of Tax

Yao Trinh

Head of Corporate & Commercial Solicitor

Still Have Questions? Book a Call!

If your question isn’t covered here or you need expert guidance, book a free consultation with our SEIS/EIS advisors or send us an email at ask@dragonargent.com and we’ll get back to you shortly.