Does my company qualify for the scheme?
📘Overview
If you're exploring raising investment via SEIS or EIS, you’ll need to check whether your company meets the eligibility rules. Below is a visual guide + checklist to help you assess whether your company qualifies, and what to watch out for.
✅ Core Conditions for Both SEIS & EIS
These requirements must generally be satisfied by a company before it issues shares under either scheme:
| ✅ Condition | What It Means / Why It Matters |
|---|---|
| UK Presence / Establishment | The company must be UK-resident or have a UK permanent establishment. |
| Qualifying Trade | The business must carry on a trade that is allowed under scheme rules (many trades are excluded). |
| Unquoted / Unlisted | The shares can’t be listed (or intended to list) at the time of share issue. |
| Independence / No Control by Another Company | The company should not be under undue control of another entity. |
| Use of Funds | Money raised must be used for the company’s qualifying business activities within required timeframes. |
| Sustain Qualifying Conditions | After issue, the company must continue to meet the scheme rules (often for at least 3 years). |
| Investor Risk / Genuine Equity | The investment must be genuine, with risk to capital; no guaranteed returns or protections that reduce risk too much. |
⚠️ Breach any of these rules and relief for investors may be withdrawn. Always monitor compliance.
SEIS (Seed Enterprise Investment Scheme) 🌱
SEIS is aimed at very early-stage, higher risk ventures. It offers generous tax reliefs to attract seed capital.
📋 SEIS Eligibility Criteria
| Test | Limit / Condition |
|---|---|
| Trading time | Must have traded for less than 3 years at the time of share issue. |
| Gross assets (pre-issue) | ≤ £350,000 immediately before share issue. |
| Employees | ≤ 25 full-time equivalents. |
| Max raise via SEIS | Up to £250,000 under SEIS in total. |
| No prior disqualifying investment | Must not have issued shares under certain other schemes that would disqualify SEIS. |
| Qualifying shares | Newly issued ordinary shares, paid in cash, no special / preferential rights. |
| Use of proceeds | Must be used for qualifying trade, often within a time limit or proportion rule. |
| Minimum holding period / compliance | Usually 3 years to retain relief. |
🛠️ Process & Compliance (SEIS)
- Advance Assurance from HMRC is often sought to give confidence to investors.
- Issue shares under SEIS, then submit a compliance statement (e.g. form SEIS1).
- If acceptable, HMRC issues SEIS3 certificates to investors.
- The company must maintain compliance for 3 years (or risk withdrawal).
EIS (Enterprise Investment Scheme) 🚀
EIS is more flexible for companies that are a little more established, but still small / high risk.
📋 EIS Eligibility Criteria
| Test | Limit / Condition |
|---|---|
| Trading time | Generally < 7 years (or up to 10 years for knowledge-intensive companies). |
| Gross assets (pre-issue) | ≤ £15 million before share issue. |
| Post-issue assets | Typically must not exceed certain thresholds immediately after issue. |
| Employees | ≤ 250 FTEs (or up to 500 for knowledge-intensive). |
| Annual funding cap | Up to £5 million in a 12-month period (higher for knowledge-intensive). |
| Lifetime funding cap | Max £12 million (or more for knowledge-intensive) raised under these schemes. |
| Qualifying shares | New ordinary shares, fully paid in cash, no preferential rights. |
| Qualifying trade / exclusions | Must avoid prohibited trades; must remain mainly in permitted activities. |
| Holding period & compliance | Usually 3 years (or more in some cases). |
🛠️ Process & Compliance (EIS)
- Seek Advance Assurance before issuing shares.
- Issue shares, submit compliance statement (e.g. form EIS1).
- If HMRC approves, they issue EIS3 certificates so investors can claim relief.
- The company must continue to satisfy conditions for 3 years (or longer, depending).
⚠️ Common Exclusions, Pitfalls & Risks 💡
- Excluded trades: If the business carries on disallowed trade(s) (or more than ~20% excluded activity), it might fail eligibility.
- Preferential rights / capital protection: If shares give guaranteed returns or downside protection, relief may be denied.
- Connected persons / control: If investors are connected (e.g. relatives, employees) or exert control, relief may be limited or disallowed.
- Withdrawal / clawback: If conditions cease during the mandatory period, HMRC can withdraw investor relief.
- Advance Assurance is not binding: Even if HMRC gives advance assurance, claims may still be rejected if facts differ.
- Overlaps & prior schemes: Previous use of other venture / investment schemes may limit your eligibility.
- Knowledge-intensive company special rules: If applying those extensions, extra conditions must be met.
📊 Visual Comparison: SEIS vs EIS
| Feature | SEIS | EIS |
|---|---|---|
| Max pre-issue assets | £350,000 | £15 million |
| Max employees | 25 | 250 (or 500 for knowledge-intensive) |
| Max raise (annual / lifetime) | £250,000 | £5 million/year (within lifetime cap) |
| Holding / compliance period | 3 years | 3 years (or extended in some cases) |