How do the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme work and when should businesses use them?

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are venture capital schemes established by the UK Government.

The main aim of both is to push private investment into high-risk, early-stage companies through the use of generous tax reliefs.

In order to make the most of these schemes, it is vital to understand the difference between the two and when they are most effective.

How does SEIS work?

SEIS is designed to generate funding for a company that has not yet had the chance to prove itself and is working on securing funding in its first external round.

There are three main benefits to investors when they utilise SEIS:

• Income Tax relief – Investors can benefit from a 50 per cent relief on the investment against their Income Tax bill
• Capital gains – Gains on SEIS shares, if the rules are followed and the company succeeds, are generally tax-free after the required holding period.
• Loss relief – If the company fails, investors can usually offset the loss against income or capital gains, reducing downside risk.

Where a business is high risk, SEIS can provide the confidence needed for investors to take a chance and enable entrepreneurs to follow their passion.

How does EIS work?

Once a company has begun to establish itself and is looking to grow, then EIS becomes a viable option.

Businesses looking to get support through EIS should demonstrate the current growth and the capacity for future growth to reassure investors of the value.

For investors, the benefits of EIS are:

• Income Tax relief – Investors can receive 30 per cent income tax relief on qualifying EIS investments
• Capital gains – Gains on successful EIS investments are generally exempt from Capital Gains Tax
• Deferral relief – Some capital gains from other assets can be deferred by reinvesting into EIS
• Loss relief – Losses can typically be relieved against income or capital gains

EIS can be utilised numerous times as a company grows and is an effective way of keeping up healthy investment.

What is changing with EIS?

While SEIS remains unchanged, there are four main changes that will need to be considered when engaging with an EIS from April 2026.

These changes are:

• An increase to the Annual Raise Limit – The maximum amount a company can raise per year will double from £5 million to £10 million
• Adjustments for Knowledge-Intensive Companies (KICs) – The annual limit for KICs will double from £10 million to £20 million
• Increased lifetime limit – The maximum total investment a company can receive over its lifetime will increase from £12 million to £24 million
• Increased KIC lifetime limit – The lifetime cap for KICs will double from £20 million to £40 million

For individual investors, the limit of £1 million per tax year is doubling to £2 million and the cap will be £4 million for KICs.

How can businesses make the most of SEIS and EIS?

The changes to EIS are a clear signal from the Government that businesses deserve more support to grow.

In order to make the most out of investment, you will need an expert team to help you with your finances.

We can show you effective strategies for approaching investors while also ensuring that your business is in the best financial position it can be.

Speak to our team for expert advice on handling EIS and SEIS.