Seed Enterprise Investment Scheme (SEIS) explained

If you’re an early-stage UK company with fewer than 25 employees and big ambitions, you could be eligible for SEIS – read on to find out more.

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For early-stage businesses with ambition to grow with pre-seed or seed funding, there’s a fantastic government-backed scheme that can supercharge your journey to success: The Seed Enterprise Investment Scheme (or SEIS for short).

Don’t let the name intimidate you – in this guide, we’ll break SEIS down in simple terms, with no jargon involved. If you’re dreaming big and looking for ways to take your startup to the next level, then the Seed Enterprise Investment scheme could be your ticket to growth.

Whether you’re an entrepreneur eager to raise capital or an investor seeking exciting opportunities, let’s dive into the world of SEIS and uncover how it could work for you.

What is the Seed Enterprise Investment Scheme (SEIS)?

The Seed Enterprise Investment Scheme (SEIS) is a government-backed initiative designed to encourage investment in startups and early-stage companies by offering attractive tax incentives to investors.

The SEIS is designed to aid early-stage companies and, at the same time, attract individual investors or venture capitalist firms who are willing to take a risk on promising startups.

Both investors and startups can reap the rewards of the SEIS. Investors get substantial tax benefits, making it more enticing to invest in startups. 

On the other hand, startups gain access to vital capital and benefit from the expertise and guidance of experienced investors – you can receive a maximum of £250,000 total through SEIS.

Investment limits

As a startup founder, you can raise up to £200,000 through SEIS in a tax year, helping you secure the necessary funds to grow your business.

SEIS tax relief for startups

The SEIS not only benefits investors but also offers startups relief when raising capital. For instance, the scheme allows startups to carry back SEIS investments to the previous tax year, enabling potential refunds for earlier tax payments.

SEIS eligibility: what types of businesses can benefit?

To benefit from SEIS, startups must meet certain criteria set out by HM Revenue & Customs (HMRC). If your business qualifies, you can then seek investment.

To attract SEIS investment, your startup must meet certain conditions, such as being less than two years old, having fewer than 25 full-time employees, and raising no more than £150,000 through SEIS in total.

According to, your company can use the scheme if it:

  • Carries out a new qualifying trade
  • Is established in the UK
  • Is not trading on a recognised stock exchange at the time of the share issue
  • Has no arrangements to become a quoted company or a subsidiary of one at the time of the share issue
  • Does not control another company unless that company is a qualifying subsidiary
  • Has not been controlled by another company since the date your company was incorporated

In addition to that, your company and any of its subsidiaries must:

  • Not have gross assets over £350,000 when the shares are issued
  • Not be a member of a partnership
  • Have less than 25 full-time equivalent employees in total when the shares are issued

Regarding qualifying trades: all trades qualify for SEIS/EIS, unless they consist wholly, or substantially (over 20%) of ‘excluded activities’. 

Some of the main excluded activities under SEIS include:

  • Dealing in land or property: businesses primarily engaged in dealing, developing, or holding land or property do not qualify for SEIS. However, certain property-related activities may be eligible if they meet specific criteria, such as property rental businesses.
  • Legal and financial services: activities providing legal or financial services, such as accounting, banking, and insurance, are typically excluded from SEIS. These sectors are seen as more established and might not require the same level of support as early-stage startups.
  • Farming or forestry: SEIS does not apply to businesses involved solely in farming, market gardening, or forestry. Agricultural enterprises have their specific tax reliefs and incentives.
  • Hotel and hospitality: most hotel and hospitality-related activities are excluded from SEIS. However, some niche tourism businesses or technology-oriented hospitality startups may still qualify.
  • Asset-backed activities: Businesses whose activities are primarily focused on receiving income from royalties, license fees, or other forms of non-trading income might be excluded.
  • Property development: Companies primarily engaged in property development, including the construction and sale of buildings, are generally excluded from SEIS.
  • Financial services: businesses engaged in activities such as money-lending, debt-factoring, and asset leasing may not be eligible for SEIS.
  • Passive investment companies: Companies whose main purpose is to invest in other companies without active involvement in the businesses they invest in may not qualify for SEIS.

These excluded activities are designed to ensure that SEIS focuses on supporting genuine early-stage companies with high growth potential and prevents misuse of the scheme for specific activities that might not align with its intended purpose: helping small and independent UK companies to get their best start.

How the SEIS works for startups

One of the most obvious benefits of the SEIS for startups is access to up to £250,000 in investment capital. On top of this, qualifying businesses can enjoy a range of other benefits thanks to the SEIS, however: 

Access to capital

Securing funding is often a significant hurdle for startups. SEIS offers an attractive incentive for potential investors, making it easier for you to raise the funds needed to develop a business.

Investor expertise

Along with financial support, SEIS investors can bring valuable experience and knowledge to the table. Having investors who are genuinely interested in the success of your venture can open doors to new opportunities and help you navigate challenges.

Marketing and branding

Being SEIS qualified can work wonders for your small UK business, not only financially, but also when it comes to marketing, branding, or rebranding

Being able to demonstrate that your business has met certain eligibility criteria and has been recognised by the government as having high growth potential. This stamp of approval can enhance the company’s reputation and make it more appealing to stakeholders, investors, customers, and joint venture partners.

The qualification can add a compelling chapter to your business story. You can leverage this achievement in your marketing materials, website, and promotional content to create a narrative that highlights your company’s ambition, innovation, and dedication to success. 

People love stories, and a SEIS qualification gives you an excellent one to share with the world.

SEIS qualification can also attract media attention. Local and industry-specific publications often cover success stories of SEIS-backed startups, as well as business awards (like our very own Startups 100 and many other initiatives now championing diversity), presenting you with opportunities to share your journey, achievements, and vision. 

How the SEIS works for investors

To qualify for SEIS tax relief, investors must meet certain eligibility criteria. There are also some limitations to how much an investor can invest in a year. We explain more, below:

Eligibility requirements:

Investors must be UK taxpayers, not connected to the companies they invest in beforehand, and be prepared to hold the issued shares for a minimum of three years.

Investment limits:

Investors can contribute up to £200,000 in a tax year through SEIS, and can invest in multiple qualifying companies. By spreading investments across various startups, they can mitigate some of the risks associated with early-stage ventures.

SEIS tax relief for investors:

One of the most attractive aspects of SEIS is the tax relief it offers investors. They can claim 50% of their investment as income tax relief, meaning that if they invest £10,000, they can reduce their income tax liability by £5,000. 

Additionally, any potential capital gains made from selling SEIS shares are exempt from capital gains tax.

The risks of investing in SEIS

Investing in early-stage companies always carries a level of risk, and SEIS is no exception. Here are some potential risks that investors should be aware of:

The potential for loss

As with any startup investment, there is a chance that the business may not succeed, leading to a loss of investment capital. 

Valuing early-stage startups can be challenging, and without transparent and reliable metrics to measure against, it becomes harder for an investor to establish a fair market price for the shares, further deterring potential buyers.

Investors should carefully evaluate their investment horizons and risk tolerance before committing to SEIS opportunities. Additionally, seeking advice from financial advisors or professionals familiar with SEIS can provide valuable insights and help make informed investment decisions.

The illiquidity of SEIS investments

When we say that SEIS investments are “illiquid,” it means that they are not easily convertible to cash. This also means it may take several years before you can sell your shares and realise any potential gains.

Unlike publicly-traded companies listed on stock exchanges, where investors can easily buy and sell shares through a secondary market, SEIS-qualifying startups also typically lack such marketplaces. The absence of an established market for these shares makes it difficult for investors to find buyers when they wish to sell.

It’s essential for investors considering SEIS investments to understand the illiquidity aspect and be prepared for the possibility of their money being tied up for a significant period. 

Investing in startups through SEIS requires a long-term approach and a willingness to wait patiently for potential returns.

Case Study: The Adventure App - A Journey with SEIS

Meet The Adventure App, a UK startup founded by Chris, an outdoor enthusiast with a passion for helping people explore nature’s wonders. Chris envisioned a mobile app that would connect adventure seekers with thrilling experiences and hidden gems across the country. 

To bring this dream to life, The Adventure App needed the funds to embark on its own journey of growth.

Step 1: Laying the foundation

In the early stages, The Adventure App underwent a thorough review of SEIS eligibility criteria. As a UK-based startup with a focus on innovation and growth, they checked all the boxes, making them eligible for SEIS qualification.

Step 2: SEIS qualification

With paperwork in order and an innovative business plan in hand, The Adventure App was officially SEIS-qualified, opening doors to exciting opportunities for both the company and potential investors.

Step 3: Attracting investors

The Adventure App caught the attention of Emily, a venture capitalist with a keen interest in supporting startups that align with her love for outdoor adventures. Although she typically provided funding for female-founded startups, she was immediately captivated by the app’s potential to revolutionise outdoor experiences and saw an opportunity for a mutually beneficial partnership. 

Curious about The Adventure App’s SEIS qualification, Emily delved into the scheme’s details. The tax incentives offered through SEIS piqued her interest, making the investment opportunity even more compelling. 

Emily conducted thorough due diligence on The Adventure App, examining their business plan, financial projections, and market analysis. The SEIS qualification reassured her that the company had met certain standards, boosting her confidence in the venture’s potential.

Armed with her research and driven by her passion for adventure and innovation, Emily decided to invest £50,000 in The Adventure App. With SEIS, she knew that she could claim 50% income tax relief on her investment, reducing her initial financial risk and making it an attractive opportunity for venture capital. The SEIS tax relief offered a win-win situation, reducing her financial exposure while supporting a promising startup.

Step 4: Investor expertise

Beyond the financial investment (and in order to make the most out of it for both parties), Emily actively supported The Adventure App’s growth journey. Her network and industry knowledge opened doors to strategic partnerships and helped the company gain traction in the market.


As a startup founder, SEIS can be an excellent way to attract funding, gain access to expertise, and enhance your brand’s reputation. However, both investors and startups alike must educate themselves on the potential risks of investing in early-stage ventures and work together to mitigate them in order to obtain the best ROI. 

With careful planning and the right approach, SEIS can be a game-changer for your business, propelling it toward success in the market.

If you feel your business may be eligible, apply to the SEIS scheme here.

Written by:
Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 14 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.
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