SEIS vs EIS — Which Scheme Applies to Your Startup and What Do Investors Actually Get?

If you're raising investment for your startup, two of the most powerful tax-advantaged schemes in the UK are SEIS and EIS. Both are backed by HMRC and designed to encourage private investors to back early-stage British businesses, but they serve different stages of company growth and carry different rules, limits, and investor benefits.

Understanding which one applies to you and getting it right from the start can make a significant difference in how attractive your raise looks to investors. One of the most common questions we receive at YRF Accountants, one of the leading accounting firms in Bolton and Manchester, is simply: which scheme does my company qualify for?

Let's break it down clearly.

What Is SEIS?

SEIS stands for the Seed Enterprise Investment Scheme. It is specifically designed for very early-stage startups — companies that are just getting off the ground and need initial seed funding.

For the 2025/26 tax year, the key rules for companies are:

What Does a SEIS Investor Actually Get?

• 50% income tax relief on investments up to £200,000 per tax year
• Capital Gains Tax exemption on any gains from SEIS shares held for 3+ years
• CGT Reinvestment Relief — 50% CGT relief when reinvesting gains into SEIS-qualifying shares
• Loss relief if the company fails — investors can offset losses against income tax

This is an extraordinary set of reliefs. An investor putting in £100,000 under SEIS could immediately reduce their income tax bill by £50,000. This makes SEIS shares significantly more attractive than a straightforward equity investment.

What Is EIS?

EIS — the Enterprise Investment Scheme — is the older, larger, and slightly more established cousin of SEIS. It is designed for startups and growing companies that are beyond the very early seed stage but still need significant investment to scale.

For the 2025/26 tax year, the key rules for companies are:

What Does an EIS Investor Actually Get?

• 30% income tax relief on investments up to £1,000,000 per tax year (up to £2m for knowledge-intensive companies)
• CGT exemption on gains from EIS shares held for 3+ years
• CGT Deferral Relief — investors can defer existing CGT liabilities by reinvesting into EIS
• Loss relief available if the company fails
• IHT Business Property Relief after 2 years

While the income tax relief rate is lower than SEIS (30% vs 50%), EIS allows investors to commit significantly larger sums, making it the preferred vehicle for more substantial funding rounds.

Can You Use Both SEIS and EIS?

Yes — and this is a powerful strategy many startups use. A company can raise its initial seed round under SEIS, and once the SEIS limit is reached, subsequently raise further investment under EIS. This 'SEIS then EIS' approach allows companies to maximise investor tax incentives at every stage of their fundraise.

However, there are rules about the order and timing and HMRC Advance Assurance is strongly recommended before beginning any raise to confirm eligibility. This is where specialist advice from accounting firms in Bolton and Manchester becomes invaluable.

Key Differences at a Glance

How YRF Accountants Can Help

Navigating SEIS and EIS compliance is not straightforward. From structuring your share capital correctly to preparing HMRC Advance Assurance applications and issuing compliant EIS3/SEIS3 certificates to investors, every step requires attention to detail.

As specialist accounting firms in Bolton and Manchester, we work with SaaS companies, tech startups, and service businesses across the UK on SEIS and EIS compliance, helping founders raise faster and investors claim their reliefs with confidence.

Whether you're raising your first £50,000 or your first £2 million, speak to our team before you take a single investor pound.

Frequently Asked Questions

What is the difference between SEIS and EIS for investors?

SEIS offers 50% income tax relief on investments up to £200,000 per year, while EIS offers 30% relief on larger amounts. SEIS is aimed at early-stage companies and carries higher relief rates to compensate for the greater risk involved.

Can my company apply for both SEIS and EIS?

Yes. Companies can raise under SEIS first and then move to EIS once the SEIS limit is reached. Both can be used in sequence, but the timing and structure must comply with HMRC rules.

Do I need Advance Assurance before raising under SEIS or EIS?

It is not legally required, but it is strongly advisable. Advance Assurance from HMRC confirms your company qualifies before investors commit. This protects both the company and the investor.

How do I find accounting firms in Manchester experienced in SEIS and EIS?

YRF Accountants works with startups and founders across Manchester, Bolton, and Bury on SEIS and EIS applications. Contact us to discuss your raise.