If you’re raising money in the UK, two acronyms are going to come up early and often: SEIS and EIS. Both are government-backed tax relief schemes designed to make investing in early-stage startups more attractive. Both can genuinely change who’s willing to write you a cheque – and for how much. But they’re not interchangeable, and choosing the wrong one (or misunderstanding the rules) can create real headaches further down the line.

Here’s a practical breakdown of how they differ and how to figure out which one fits your current raise.

What is SEIS?

The Seed Enterprise Investment Scheme (SEIS) is designed for very early-stage companies. It lets eligible startups raise up to £250,000 under the scheme, and investors can claim back 50% of their investment as income tax relief – up to £200,000 invested per tax year.

On top of that, any gains made when investors eventually sell their shares are exempt from Capital Gains Tax (CGT), provided they’ve held the shares for at least three years. If the investment goes south, investors can claim loss relief against their income or capital gains – softening the blow considerably.

To qualify, your company needs to be less than three years old, have fewer than 25 full-time employees, and hold gross assets of no more than £350,000 at the time of the share issue. You also need to be a UK-registered company carrying out a qualifying trade.

What is EIS?

The Enterprise Investment Scheme (EIS) is aimed at slightly more developed businesses. Under EIS, companies can raise up to £5 million per year and up to £12 million over the company’s lifetime (or £20 million for knowledge-intensive companies). Investors receive 30% income tax relief – lower than SEIS but still substantial – plus CGT deferral and loss relief.

EIS eligibility is broader. Your company can be up to seven years old (10 for knowledge-intensive companies), have fewer than 250 employees, and hold gross assets of no more than £15 million.

Importantly, you can’t run a concurrent SEIS and EIS raise for the same shares – but you can raise SEIS first, then follow up with EIS once your SEIS allocation is fully used.

The key differences at a glance

Which is right for your round?

If you’re raising your very first external round and you’re pre-revenue or very early stage, SEIS is usually the right starting point. The 50% relief makes it significantly more compelling for angel investors who are used to taking on high risk – and it sends a clear signal that you’ve done the groundwork.

If you’ve already raised a seed round, used up your SEIS allowance, or your company has grown past SEIS eligibility, EIS is the natural progression. It gives you access to a larger pool of capital and is the go-to scheme for more developed rounds.

One common mistake founders make is assuming they can apply SEIS retroactively. You can’t. The scheme needs to be in place before shares are issued, which is why getting HMRC Advance Assurance matters.

What is Advance Assurance and do you need it?

Advance Assurance is a way of confirming with HMRC – before the raise happens – that your company and the proposed investment qualify for SEIS or EIS relief. It’s not legally required, but most serious angel investors will want to see it. It removes ambiguity and gives them confidence that the tax benefits they’re counting on are real.

The application involves submitting details about your company, its trade, and the intended use of funds. It can take several weeks, so it’s worth starting the process early – ideally before you begin investor conversations.

Getting it right from the start

Both SEIS and EIS are genuinely powerful tools for UK startups. Used correctly, they lower the risk profile for investors, increase the effective value of every pound raised, and give your round a competitive edge. Used incorrectly – or applied to the wrong raise – they can cause compliance issues, delay completions and frustrate the very investors you’re trying to impress.