Overview of EIS & SEIS

Both schemes aim to make investing in unlisted, early-stage UK companies more attractive to individual investors. They facilitate business growth by helping these companies raise equity finance.

1. Seed Enterprise Investment Scheme (SEIS)

● Target: Very early-stage, seed-level startups. It's designed for the riskiest, newest businesses.

● Focus: Helping the smallest companies raise their initial capital.

2. Enterprise Investment Scheme (EIS)

● Target: Small, slightly more established companies, typically beyond the seed stage, that are looking to scale up.

● Focus: Supporting the growth and development of qualifying businesses.

Key Differences and Investor Reliefs

Feature	Seed Enterprise Investment Scheme (SEIS)	Enterprise Investment Scheme (EIS)
Target Company Age (from first commercial sale)	Less than 3 years old	Less than 7 years old (10 years for Knowledge-Intensive Companies)
Maximum Company Assets (pre-investment)	Less than £350,000	Less than £15 million
Maximum Employees	25 full-time equivalent	250 full-time equivalent (500 for Knowledge-Intensive Companies)
Company Fundraising Limit (Total)	£250,000 lifetime limit	£12 million lifetime limit (or £20 million for KICs)
Investor Annual Limit	£200,000	£1 million (£2 million if at least £1m is in KICs)
Income Tax Relief	50% of the amount invested	30% of the amount invested
Capital Gains Tax Exemption	100% exemption on profit if shares held for $\geq 3$ years	100% exemption on profit if shares held for $\geq 3$ years
Capital Gains Tax Deferral/Reinvestment	Reinvestment Relief: 50% of a separate capital gain can be exempt if reinvested.	Deferral Relief: Payment of tax on a separate capital gain can be deferred.
Loss Relief	Yes, allows net loss to be offset against income or capital gains.	Yes, allows net loss to be offset against income or capital gains.

Note: The tax reliefs are only valid if the shares are held for a minimum of three years and the company maintains its qualifying status. Investment through both schemes is considered high-risk, and capital is at risk.

Using Both Schemes

It is common for a company to use SEIS first to raise initial seed capital due to the more generous tax relief for investors, followed by EIS as the company grows and requires a larger funding round.

Important Rule: A company that has already received EIS investment cannot subsequently qualify for SEIS. Therefore, SEIS must always precede EIS.