What is the difference between SEIS and EIS?

📘 Overview

This article explains the key differences between the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Both schemes are designed to help early-stage companies raise investment by offering generous tax reliefs to individuals who buy new shares.

What this article covers

Who qualifies for SEIS and EIS
How long a company can have been trading
The level of tax relief offered to investors
How companies typically move from SEIS to EIS

SEIS: Early-stage support for very young companies

SEIS is designed for start-up companies that are still in their earliest phase of trading.

Key points:

The company must have traded for two years or less.
SEIS offers investors 50% income tax relief on the amount they invest.
SEIS is usually the first scheme a new company uses when raising external funding.

This higher tax relief reflects the higher risk involved in investing in very early-stage businesses.

EIS: Support for companies scaling beyond the start-up phase

EIS is intended for companies that are further along in their growth journey.

Key points:

The company must have traded for seven years or less.
For knowledge-intensive companies, this limit increases to ten years.
EIS offers investors 30% income tax relief on the amount invested.

EIS provides valuable support for businesses that are still young, but beyond the earliest seed-stage.

How the schemes relate to each other

Aside from the trading-age limits and tax relief percentages, SEIS and EIS operate in broadly similar ways. They share many of the same rules, conditions, and compliance processes.

In practice, companies often follow a clear progression:

Start with SEIS during the first fundraise (while within the two-year trading window).
Move on to EIS for subsequent fundraising rounds once the company has matured.

This staged approach allows companies to benefit from both schemes as they grow.

💡 Summary: Key practical points

SEIS: For companies trading up to two years, with 50% tax relief for investors.
EIS: For companies trading up to seven years, or ten years for knowledge-intensive companies, with 30% tax relief.
Companies commonly begin with SEIS, then transition to EIS as they scale.