Enterprise Investment & Seed Enterprise Investment Scheme

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer valuable tax reliefs to investors in UK companies. However, navigating the rules can be complex, and making an error in compliance requests can have significant consequences. This blog explores the key differences between EIS and SEIS, common pitfalls, and how to ensure compliance.

The Difference Between the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS

Both schemes encourage investment in early-stage businesses by offering tax incentives. However, there are crucial distinctions:

  • SEIS is aimed at very early-stage businesses and offers up to 50% income tax relief on investments up to £200,000 per tax year.
  • EIS is designed for more established companies and provides 30% income tax relief on investments up to £1 million per tax year.
  • SEIS allows businesses to raise up to £250,000 in total, while EIS permits up to £12 million (or £20 million for knowledge-intensive companies).

A Costly Compliance Mistake

One critical rule to be aware of is that once an EIS compliance certificate request has been authorised by HMRC, you cannot later request SEIS for a subsequent share issue. Even if the initial request was made in error or on the wrong form, SEIS qualification will no longer be possible.

This mistake can be costly for businesses hoping to access SEIS benefits. Ensuring the correct scheme is applied for at the right time is essential.

How to Avoid Common Pitfalls

  • Plan ahead – Confirm whether EIS or SEIS is the best option before issuing shares.
  • Double-check forms – Errors in compliance requests can be irreversible.
  • Seek professional advice – Consulting an expert can help prevent costly mistakes.

How We Can Help

At Lewis Brownlee, we specialise in EIS and SEIS compliance. Our team ensures that businesses select the right scheme and avoid errors that could impact tax relief eligibility.

If you need support with EIS or SEIS applications, contact us via our contact page today.