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Last updated: 26 Sep 2023

Scaling smarter: Picking the right venture capital scheme for your thriving business

At a time when debt financing is becoming increasingly expensive, the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS) act as a great alternative for scale-ups. Here's what you need to know about the schemes before applying.

Both SEIS and EIS allow trading companies to access funding that would not have ordinarily been available by offering individual investors generous tax reliefs for equity investments made in companies that qualify for the schemes.

Companies need to meet specific criteria to access this funding. Although the schemes are similar, there are a number of differences that companies should consider before deciding which scheme to use.

What are the differences between SEIS and EIS?

Company size: the differences between the schemes start with the size of the business they're designed to support. SEIS is available to smaller, earlier-stage companies, while EIS is for relatively more established companies.
Risk: since SEIS supports companies just starting, its investment is also seen as riskier, and as a result, the tax reliefs available under SEIS are more generous than EIS.
Company and individual investment limits: the annual and total qualifying investment limits for the investors and the company also differ between the schemes. There are also differences in time limits for when the funds must be raised and used by the company.

The following table provides an overview of the differences between the schemes:

	SEIS	EIS
Company size
Maximum gross assets value	£350,000 *	£15 million immediately before the issue of shares and £16 million immediately after
Maximum number of full-time employees	25	250
Company and individual investment limits
Maximum company can raise via the scheme in total	£250,000 *	£12 million **
Maximum company can raise via the scheme per tax year	-	£5 million **
Maximum individual can invest via the scheme per tax year	£200,000 *	£1 million **
Investor tax reliefs
Income tax relief	50% of investment	30% of investment
Capital gains tax relief	50% re-investment relief for gains reinvested in SEIS	Deferral relief for gains invested in EIS
Capital gains exempt	Yes, if the shares are sold more than three years after investment	Yes, if the shares are sold more than three years after investment
Inheritance tax	100% relief if shares held for at least two years	100% relief is shares held for at least two years
Time limits
Time limit for when the first shares under the scheme must be issued	Three years of commencement of trade*	Seven years of commencement of trade**
Time limit for when the funds raised must be used for qualifying purposes	Three years after issue of shares	Two years after the issue of shares

* These limits changed with effect from 6 April 2023

** These limits are increased for knowledge-intensive companies

How we can help

We understand that navigating between the two schemes and identifying what works best for your business can be challenging. We’ve also seen that the numerous scheme updates and changes have translated into complex legislation and application processes. Therefore, we recommend getting advice and speaking to us before applying for the schemes as early as possible.

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