What can I spend the investment on?

📘 Overview

This article explains how your company must use funds raised under the Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS). These schemes offer valuable tax reliefs to investors, but in return your company must follow specific rules about how the money is spent. This helps HMRC ensure the investment genuinely supports early-stage business growth.

💡 Key Conditions

Use in a Qualifying Trade

Funds must be used for a qualifying trade or to prepare to carry out one.

This can include activities such as research and development (R&D) or work directly linked to getting the business up and running.

Examples include:

• Early product research
• Market testing
• Activities required to begin trading (for example, regulatory preparation or initial tooling)

Spend Within 3 Years

All money raised under SEIS or EIS must be fully spent within three years of receiving it.

The spending must clearly support your company’s growth and development, rather than general operational or financial activities. This means the funds cannot be used to repay loans, distribute dividends, or cover costs that do not contribute to building the business.

🔍 Examples of Qualifying Use

Activities that qualify

• Product development and testing
• Hiring staff to grow or strengthen operations
• Expanding into new markets (for example, early marketing or localisation work)
• Developing technology or intellectual property (IP)

Activities that do not qualify

• Repaying existing debts
• Paying dividends
• Acquiring another company

Summary of Key Points

• Funds must support a qualifying trade or preparation for one.
• All SEIS/EIS money must be spent within three years.
• Spending must directly contribute to growth, not financial restructuring or shareholder returns.
• HMRC may withdraw reliefs if funds are used incorrectly, so clear documentation is important.