EIS and SEIS offer conditional tax relief on higher-risk company investment. Eligibility and the underlying commercial decision are separate. A company’s description of itself as “EIS eligible” is not proof that a particular investor will receive every relief.
Investor limits and claims
HMRC’s investor guidance sets EIS Income Tax relief at 30%, normally on up to £1 million a year, or £2 million if at least £1 million goes into knowledge-intensive companies. SEIS offers 50% on up to £200,000. Relief is limited by UK Income Tax liability and the relevant conditions; unused Income Tax relief cannot simply be carried forward.
The required compliance certificate must be available before a claim. Depending on the year and claim type, the process can involve Self Assessment, the certificate’s claim section, or a request to adjust a current PAYE code or payment on account. Annual Self Assessment is not the only route. Use HMRC’s instructions for the actual claim.
Disposal, reinvestment and loss relief have separate requirements. An EIS loss, reduced by Income Tax relief already given, can potentially be set against income in the disposal year or the preceding year. Neither a three-year holding period nor an HMRC certificate alone guarantees the complete tax outcome.
Company fundraising limits are different
Under HMRC’s EIS company rules, the ordinary post-April 2026 limits are £10 million in 12 months and £24 million over the company’s lifetime, including relevant venture-capital-scheme funding. The usual gross-asset limits are £30 million before share issue and £35 million afterwards, with fewer than 250 full-time equivalent employees. Knowledge-intensive companies have separate conditions and higher fundraising limits.
Specified companies registered in Northern Ireland and trading in goods or the wholesale electricity market retain lower limits. Age, independence, qualifying trade, use of funds and risk-to-capital conditions also matter. A headline asset ceiling is not a complete eligibility test.
For SEIS, the company cap is £250,000, including relevant de minimis aid. At share issue, gross assets must not exceed £350,000 and there must be fewer than 25 full-time equivalent employees. The qualifying trade must not have been carried on for more than three years, including by a previous owner. Prior EIS or VCT investment prevents SEIS use. These company limits should not be confused with the investor’s £200,000 annual limit.
What changed, and what did not
The 2026 EIS/VCT measures raised company limits and reduced upfront VCT Income Tax relief to 20% for qualifying newly issued shares from 6 April 2026. They did not create a new SEIS extension. The EIS/VCT sunset permits qualifying share issues before 6 April 2035; SEIS was made permanent in 2014. These distinct histories are recorded in the EIS/VCT extension and HMRC’s SEIS permanence note.
Practical due diligence
ObvioTech assessment: review the commercial case before treating relief as a reason to invest. Ask for the proposed share terms, use of proceeds, financial runway, material risks and an explanation of the applicable scheme. Record separately what the company asserts, what HMRC has confirmed and what your adviser has checked for you.
Advance assurance is optional and concerns specified scheme conditions based on supplied information. HMRC explicitly says it is not an endorsement or an indication of investment performance. It does not replace the company’s subsequent compliance process or the investor’s own eligibility checks.
Also consider the ability to sell, concentration of risk and the consequences of losing relief. A failed company can still cause a substantial loss. EMI employee options, EIS fundraising and SEIS fundraising are separate schemes; they are not a compulsory sequence through a company’s life.
General information only. Seek qualified tax and investment advice on your circumstances; this article does not recommend an investment.
