Quick Insights: SEIS vs. EIS: Choosing the Right Scheme

Series 2: Applying for SEIS/EIS

Streamlining your journey throughout the SEIS/EIS application process – from choosing the right scheme to application prep and what documents you’ll need.

Welcome to the kickoff of our series, “Applying for SEIS/EIS,” tailored for UK startup founders. In this first insight, we’re diving into the crucial decision between the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Understanding these options is vital for aligning your funding strategy with your business’s growth phase and investment needs.

Understanding SEIS and EIS

SEIS and EIS are potent tools designed to boost your UK startup’s appeal to investors through attractive tax reliefs. Each scheme is tailored to different stages of your business’s life cycle:

1. Investment Caps and Business Scale:

  • SEIS is best for early-stage startups – startups less than two years old, with no more than £200,000 in assets and 25 employees. It allows you to raise up to £150,000.
  • EIS is for the more seasoned flyers – companies up to seven years old (or ten for knowledge-intensive businesses), with assets up to £15 million and 250 employees, aiming to raise up to £5 million annually.

2. Tax Relief:

  • SEIS offers a generous 50% tax relief on investments up to £100,000 per investor per year, making it extremely attractive for early-stage investments.
  • EIS provides 30% tax relief for investments up to £1 million annually (or £2 million for knowledge-intensive companies), appealing to investors looking to contribute larger sums.

Choosing the Right Scheme

Assess Your Stage of Development:

The choice between SEIS and EIS largely hinges on your company’s maturity and immediate financial needs. SEIS is perfect for startups in their initial seed stage, while EIS is suited for more established businesses focusing on scaling operations or expanding into new markets.

Consider Your Funding Requirements:

Reflect on the capital you aim to raise. SEIS is suitable for smaller, initial funding rounds, whereas EIS can accommodate larger, more substantial investments for significant growth phases.

Evaluate Investor Benefits:

SEIS’s higher tax relief can be more appealing for investors willing to back new ventures, whereas EIS’s higher investment limits may attract those looking to invest substantial amounts in a growing company.

Wrapping Up

Choosing between SEIS and EIS requires careful consideration of your startup’s current situation, future objectives, and the types of investors you aim to attract. By selecting the scheme that best fits your startup’s needs, you’re setting the stage for successful funding.

Ready to get the ball rolling? Our next Quick Insight, “Preparing Your SEIS/EIS Application,” will walk you through prepping to create a standout application to make the most of these opportunities. 

Ready to make the most of SEIS/EIS for your startup? Let’s chat! Whether you’re seeking clarity on eligibility, benefits, or advance assurance, we’re here to guide you through the process. Book a no-obligation consultation with Elliott Gaspar, Standard Ledger’s Founding UK Director, and unlock the potential of these valuable investment schemes for your startup.

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