What is SEIS (Seed Enterprise Investment Scheme)?
The Seed Enterprise Investment Scheme (SEIS) is the UK government's most generous initiative designed to encourage investment in the smallest, highest-risk startups. It offers investors unparalleled tax breaks in exchange for taking a gamble on the earliest stages of innovation.
For many UK founders, getting SEIS clearance is the essential first step to unlocking funding from local angel investors.
The Investor Benefit (The Pitch) SEIS provides a significant shield against risk, making the investment highly attractive:
- Income Tax Relief: Investors can claim back 50% of the amount they invest against their income tax bill. If they invest £10,000, they effectively get £5,000 back from the government.
- Capital Gains Tax Exemption: Profits made on the sale of the shares after three years are tax-free.
- Loss Relief: The tax relief significantly softens the blow if the company fails.
Eligibility and Limits SEIS is reserved for the truly small and new:
- Max Raise: A company can raise a lifetime maximum of £250,000 under the SEIS scheme.
- Company Age/Size: The company must be trading for less than two years and have gross assets under £350,000.
SEIS vs. EIS Founders often combine the schemes: SEIS is used for the first £250,000 (at 50% relief), and EIS (Enterprise Investment Scheme) is used for subsequent funding (at 30% relief).
Key Takeaway: SEIS is critical funding bait. It means an angel's actual financial exposure is less than half their investment, massively de-risking your earliest round.
