SEIS and EIS Investments – General Counsel Know-How

John McLean spoke at our General Counsel Know-How series on SEIS and EIS investments.

Read some quick takeaways from the session below and you can watch the full recording of the session here.

Purpose of EIS and SEIS

These schemes encourage investment in early-stage businesses by offering significant tax advantages to investors. EIS targets slightly more mature companies, while SEIS focuses on the earliest stages of business development, offering even more generous incentives.

Tax Benefits for Investors

Investors can benefit from income tax relief (30% for EIS and 50% for SEIS), deferral or exemption of capital gains, and loss relief. In certain scenarios, they can achieve downside protection of up to 86.5%, depending on the combination of tax benefits.

Qualifying Criteria for Issuers

Issuing companies must carry out or plan to carry out a qualifying trade, excluding activities like property development, financial services, and energy generation. Additionally, funds raised must be used for genuine long-term growth and development.

Application and Documentation Process

Advance assurance, while not mandatory, is often expected by investors and provides confidence about eligibility. The process typically takes 4–6 weeks and requires detailed documentation such as business plans, financial records, and corporate details.

Practical Considerations and Pitfalls

Shares must be fully paid and subscribed in cash; non-cash considerations like services or crypto are not permitted. Timing is critical, especially for SEIS rounds, which must precede EIS equity issues. Proper planning and compliance with HMRC requirements are crucial to avoid rejection or delays.