Seed Enterprise Investment Scheme

The Seed Enterprise Investment Scheme (SEIS) lets a young company raise up to £250,000 in total from investors who get 50% income tax relief on what they put in. At November 2026 the company’s trade must be under three years old, with gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued.

Start a funding searchFind what fits

How the seed scheme works for your company

The seed scheme gives tax relief to the people who buy your shares, but the conditions fall on the company. The company meets the rules on age, size, trade and use of the money. HMRC accepts its compliance statement, the company issues a certificate to each investor, and each investor uses the certificate to claim. If the company breaks the rules in the three years after the share issue, investors can lose their relief, so the scheme is a set of commitments the company carries for three years after the money arrives.

For the investor the relief is large. Income tax relief is 50% of the amount invested, on up to £200,000 a tax year. Gains on the shares are exempt from capital gains tax if the investor received the income tax relief and held the shares for at least three years. If the company fails, the investor can set the loss, less the relief already given, against their income. An investor who puts a capital gain into seed scheme shares can also get capital gains tax relief on 50% of the investment, up to £200,000.

Put together, an investor’s money at risk is a good deal smaller than the amount they subscribe, as the worked example shows. That is why investors in a first round ask whether the shares qualify before they ask much else.

The seed scheme comes first in the order of rounds. A company cannot use it once it has had investment through EIS or a venture capital trust, so the seed scheme shares must be issued before any EIS shares. Under the rules in force at November 2026, that means on an earlier day. Money raised under the seed scheme also counts toward the EIS annual and lifetime limits later on.

Seed scheme limits at November 2026

£250,000the most a company can raise under the scheme in total, including other de minimis state aid in the previous three years
£350,000the most the company and its subsidiaries can hold in gross assets when the shares are issued
Under 25full-time equivalent employees, counting subsidiaries
3 yearsthe longest the trade can have been carried on

Source: gov.uk, Apply to use the Seed Enterprise Investment Scheme to raise money for your company, checked 3 November 2026.

Qualifying conditions for the company

Permanent establishment
The company must have a permanent establishment in the UK.
Unlisted and independent
It must not be listed on a recognised stock exchange when the shares are issued, and must not be controlled by another company.
Age of the trade
If the company is already trading, the trade must not have been carried on for more than three years, by the company or by anyone who passed it to the company.
Size
Gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees, counting subsidiaries, when the shares are issued.
Qualifying trade
A commercial trade run to make a profit. It fails if more than 20% of it is an excluded activity.
No earlier EIS or trust money
The company cannot already have had investment through EIS or a venture capital trust.
Risk to capital
The company must aim to grow and develop its trade over the long term, and the investment must carry a risk that the investor loses more capital than they gain as a net return, counting the tax relief. Arrangements giving one investor priority or an early way out break the condition, which has applied to investments since 15 March 2018.
Use of the money
Spent within three years of the share issue on the qualifying trade, on preparing to carry it on, or on research and development expected to lead to it. It cannot buy shares, except in a qualifying 90% subsidiary that spends it on a qualifying activity.
A scientist using a pipette in a laboratory

Excluded trades

Some trades cannot use the scheme. A company does not qualify if more than 20% of its trade is in an excluded activity, and the list is the same for the seed scheme, EIS and venture capital trusts.

The list covers property development, hotels and nursing homes, farming, leasing, legal and financial services, and energy generation. A software company that also leases equipment to its customers, or a food producer with a farm attached, has to measure how much of its trade falls inside the list.

If you are unsure, apply for advance assurance. HMRC looks at the trade described in your business plan and says whether the investment is likely to qualify.

  • Property development
  • Running a hotel or a nursing home
  • Farming or market gardening
  • Leasing
  • Legal or financial services, banking, insurance and lending
  • Coal and steel, energy generation, fuel production and exporting electricity

What the relief is worth to an investor

Illustrative example

An investor subscribes £20,000 for seed scheme shares and has at least £10,000 of income tax due for the year, so can use the full relief. The company later fails and the shares are worth nothing.

Amount invested
£20,000
Income tax relief at 50%
£10,000
Net cost to the investor
£10,000
Loss after the relief already given
£10,000
Loss relief against income, at an assumed income tax rate of 45%
£4,500
Money lost by the investor
£5,500

The relief reduces the investor’s income tax bill for the year and cannot take it below zero, which is why the example assumes enough tax to absorb it. An investor paying a lower rate of income tax gets less from loss relief.

Raising under the seed scheme

  1. 1

    Advance assurance

    Optional. Apply online to HMRC with the business plan, forecasts and draft documents, and show the reply to investors.

  2. 2

    Issue the shares

    Issue ordinary shares for cash, before any EIS shares, and file form SH01 at Companies House within one month.

  3. 3

    Trade or spend

    Carry on the qualifying trade for four months, or spend 70% of the money raised, whichever comes first.

  4. 4

    Compliance statement

    Submit the statement online. Once HMRC accepts it, the company issues each investor a certificate to claim relief.

Changes announced on 28 October 2026

The Budget on 28 October 2026 announced changes for shares issued on or after 6 April 2027. Seed scheme shares and EIS or venture capital trust shares will be able to be issued on one date. HMRC will be able to treat shares as fully paid where payment was late for exceptional reasons. Interest charged when seed scheme relief is withdrawn will follow the EIS rules. None of these is in force at November 2026.

Questions people ask

Can a company use the seed scheme and EIS?

Yes, in that order. A company cannot use the seed scheme after it has had EIS or venture capital trust investment, so it issues its seed scheme shares first. At November 2026 the EIS shares have to be issued on a later day; from 6 April 2027 the two can be issued on one date. The money raised under the seed scheme counts toward the EIS limits of £10 million a year and £24 million in total.

How long does a company have to spend seed scheme money?

Three years from the share issue. The money must go on the qualifying trade, on preparing to carry it on, or on research and development expected to lead to it. Once 70% is spent, or the company has traded for four months, it can submit its compliance statement, so spending the money is also what lets investors claim their relief.

Is the £250,000 seed scheme limit a yearly limit?

No. £250,000 is the most a company can raise under the seed scheme in its lifetime, and it includes other de minimis state aid received in the three years up to the investment. A company that has had £30,000 of such aid in that period can raise up to £220,000 under the scheme. The limit was raised from £150,000 for shares issued from April 2023.

Can directors invest under the seed scheme?

Yes. A director can invest and claim seed scheme relief, which is a difference from EIS. An investor who is an employee but not a director cannot. An investor who, with their associates, holds more than 30% of the company is generally barred from relief, and that test counts the shares of family members and business partners, so check founders’ holdings before they invest.

What happens if the company breaks the seed scheme rules?

The rules apply for at least three years after the investment. If the company stops meeting them in that time, for example by moving into an excluded trade or being bought by another company, investors can lose some or all of their relief, and HMRC can recover it with interest. The company must tell HMRC when it stops meeting the conditions.

Does my company need advance assurance for the seed scheme?

No, it is optional. Without it, the company can still issue the shares and submit its compliance statement once it qualifies. Investors who rely on the relief will want comfort before they commit, and advance assurance gives them HMRC’s view of the company side of the scheme. See advance assurance.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

Equity investment

Enterprise Investment Scheme

A company can raise up to £10 million a year from investors who get 30% income tax relief.

Read more →

Advance assurance for the seed scheme and EIS

HMRC says before you issue shares whether your round is likely to qualify.

Read more →

Angel investment

Business angels invest their own money in early-stage companies, alone or in syndicates.

Read more →

Getting investor ready

Prepare the deck, forecast, data room and cap table before the first investor meeting.

Read more →
All business funding

Start a funding search

Start a funding search

Funding searches run on Swoop’s platform. Swoop Finance Limited is a credit broker and not a lender, and is authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting Ltd introduces businesses to Swoop and may receive a fee from Swoop when funding is arranged. Business funding is separate from the financial advice Equity & General Financial Services Limited gives through this website. Finance is subject to status, and a lender may ask a director for a personal guarantee.

Cover for a personal guarantee

If a lender asks you to guarantee the company’s borrowing, our advisers can advise on life cover for that debt.

Request a meeting