What is SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are government-backed initiatives designed to support investment in small and medium-sized businesses.

These schemes offer significant tax relief to investors, reducing their financial risk while helping early-stage businesses secure much-needed funding. It’s a mutually beneficial arrangement for both investors and companies. But what makes a company eligible for SEIS and EIS? Let’s break it down.

Qualifying Trades for SEIS and EIS

To qualify for SEIS or EIS, your company must operate within a qualifying trade. While most businesses meet this criterion, there are exceptions.

If more than 20% of your business activities involve the following, you won’t qualify:

• Coal or steel production

• Farming or market gardening

• Leasing activities

• Legal or financial services

• Property development

• Running a hotel or nursing home

• Energy generation (e.g., electricity, heat)

• Production of gas or other fuels

• Exporting electricity

• Banking, insurance, debt, or financing services

However, companies engaged in research and development (R&D) with the aim of establishing a qualifying trade are eligible.

Another important consideration: companies listed on a recognised stock exchange (except AIM) are not eligible for SEIS or EIS.

Key Eligibility Criteria for SEIS and EIS

Your business must also meet the following requirements to qualify:

• Asset Limits:

  • SEIS: Gross assets must not exceed £350,000 before funding.

  • EIS: Gross assets must not exceed £15 million.

• Employee Limits:

  • SEIS: Fewer than 25 employees.

  • EIS: Fewer than 250 employees.

• Trading History:

  • SEIS: Your company must have been trading for no more than 3 years.

  • EIS: No more than 7 years should have passed since your first commercial sale.

• Location Requirements:

  • Your business doesn’t need to be incorporated in the UK but must have a permanent UK establishment.

  • A significant proportion of business activities must take place in the UK.

Special Rules for Knowledge Intensive Companies (KICs)

Knowledge Intensive Companies (KICs) are R&D-focused businesses that receive additional allowances under SEIS and EIS.

KIC-specific eligibility criteria include:

• Investment Limits:

  • Up to £10 million investment per year, with a lifetime cap of £20 million.

• Trading History:

  • KICs can receive EIS funding up to 10 years after starting to trade (compared to 7 years for other companies).

• Employee Limits:

  • Up to 500 employees, significantly higher than the 250 limit for standard EIS or 25 for SEIS.

Additionally, to be recognised as a KIC, at least 10% of your expenditure over the past 3 years (or 15% in any one of the last 3 years) must be dedicated to R&D. This ensures the scheme prioritises businesses driving innovation.

Ready to Get Started with SEIS or EIS?

If your business meets the SEIS or EIS requirements and you’re ready to take the next step, we’re here to help.

At [Your Company Name], we specialise in guiding businesses through the SEIS and EIS application process, including securing Advanced Assurance.

Send us an enquiry today to learn more about how we can support your business and help you unlock the benefits of these schemes.