SEIS and EIS explained for founders (and how to give investors their relief)

A quick, important note: SEIS and EIS rules, limits and rates change, and the detail matters. This article explains the schemes in plain English so you know what you're dealing with — but always confirm current limits and rules with HMRC or a qualified adviser before you rely on them.

Why these two acronyms matter so much

If you're raising from UK angels, you'll hear "SEIS" and "EIS" within about ninety seconds. There's a reason. For a great many UK angel investors, these schemes are the difference between a yes and a no.

Here's the plain version. SEIS and EIS are government tax reliefs designed to get individuals to back risky early-stage companies — companies like yours. They work by giving the investor a chunk of their money back through their tax bill, and by softening the blow if the investment goes to zero. That turns a terrifying bet into a much more sensible one.

For you, the founder, this matters in two ways. First, being SEIS/EIS-eligible makes you dramatically more investable — angels actively look for it. Second, you have a job to do: you have to handle the paperwork that lets your investors actually claim the relief. Get that wrong and you've sold them a benefit you can't deliver, which is a fast way to lose trust.

So let's make both halves clear: what the schemes are, and what you have to do.

SEIS and EIS in plain English

Both schemes do the same basic thing — give investors tax relief for backing early companies — but at different stages and sizes.

SEIS — the Seed Enterprise Investment Scheme. This is for the very earliest, riskiest stage. It offers investors the most generous relief, because they're taking the biggest risk. In broad terms, an SEIS investor gets a large slice of their investment back as income tax relief, plus protection on the downside if it fails. Because it's so generous, SEIS comes with the tightest limits — there's a cap on how much your company can raise under it, how old and how small the company can be, and how many employees you can have. It's meant for genuine seed-stage businesses.

EIS — the Enterprise Investment Scheme. This is the bigger sibling, for companies a bit further along. The relief per investor is less generous than SEIS (because the company is less risky), but the limits are far higher — you can raise much more, over the life of the company, and individual investors can put in much larger amounts. Founders often use SEIS first, then EIS for later rounds.

SEIS vs EIS, the short version: SEIS is earlier, smaller, riskier, more generous to the investor, tighter limits. EIS is later, bigger, higher limits, slightly less generous per pound. Many companies use both over time — SEIS to get going, EIS to grow.

The exact percentages, caps and time limits are precisely the things HMRC changes, so this is the bit to confirm rather than memorise. What won't change is the shape of it: relief in exchange for risk, with stricter rules the more generous the relief.

What you have to do as the founder (the obligations)

This is where founders get caught out. Being a good investment isn't enough — you have to administer the schemes correctly, in the right order, or the relief doesn't happen. Here's the journey in plain English.

Advance assurance (before you raise). Before you take the money, you can apply to HMRC for advance assurance — a letter saying your company looks eligible. You're not strictly required to get it, but you absolutely should: angels will ask for it, and "we have advance assurance" removes a huge chunk of their worry. It's the single most useful piece of paper in an SEIS/EIS raise.

Stay within the rules while you raise. The money has to be used for a qualifying purpose (genuinely growing the business), shares have to be ordinary shares with no special protections, and you have to keep inside the limits on amounts, company age, size and employees. Breaking a rule — even by accident — can disqualify the investment and lose your investors their relief.

The compliance statement (after the shares are issued). Once you've issued the shares and met a minimum trading period, you file a compliance statement with HMRC (the SEIS1 / EIS1 forms). This is you formally telling HMRC: we raised the money, here are the investors, please authorise the relief.

Issue the certificates (so investors can claim). When HMRC approves your compliance statement, they authorise you to issue each investor a certificate — the SEIS3 (for SEIS) or EIS3 (for EIS). This is the document your investor needs. Without it, they cannot claim their relief, no matter how eligible everyone is. The certificate is the whole point as far as your investor is concerned — it's how the tax benefit you promised becomes real.

Miss or fumble any of these steps and you've got an awkward conversation: an investor who backed you partly for the relief, and can't get it because the paperwork slipped.

Why the certificates are the moment that matters

Step back and notice what your investor actually experiences. They wired you money months ago on the strength of the SEIS/EIS benefit. Then, for a while, nothing — the trading period passes, you file the compliance statement, HMRC processes it. The investor is waiting.

The SEIS3/EIS3 certificate arriving in their inbox is the moment the promise is kept. It's the thing they take to their accountant to claim the relief. A founder who gets those certificates out promptly and correctly looks organised and trustworthy — exactly the founder an angel wants to back again. A founder who's vague about when the certificates are coming, or who issues them late and full of errors, undermines the whole relationship.

So this isn't back-office tidying. It's the final delivery of the thing your investor bought.

The hard way to handle all this

Done by hand, SEIS/EIS administration is a sequence of forms, deadlines and lookups that's easy to drop while you're busy running the company.

You apply for advance assurance and file it somewhere. You raise. You issue shares — and now you also need to file the SH01 with Companies House and update your cap table (see: How to issue shares and file an SH01). You wait for the trading period, then try to remember the right form for the compliance statement. You fill it in from a spreadsheet of investors that may or may not match your cap table. HMRC approves. Now you hand-prepare a certificate for each investor, transcribing names, share numbers and amounts — the kind of manual copying where one wrong figure means a rejected claim and an annoyed investor.

And underneath it all is a calendar problem: each step has a timing window, and there's no one reminding you. Miss the window and you're chasing HMRC to fix something that should have been routine.

How it works in Ledgers

In Ledgers, SEIS/EIS stops being a memory test and a transcription chore.

The SEIS3/EIS3 generator produces each investor's certificate from your cap table — the names, share counts and amounts are already in the system because that's where your share issues and ownership live, so there's nothing to retype and nothing to mistype. When HMRC authorises you to issue, the certificates come out clean and consistent.

The compliance calendar keeps the sequence on track: advance assurance, share issue and SH01, the trading-period wait, the compliance statement, the certificates — each with its timing window, so you're prompted rather than caught out. And because your cap table, share issues and investor records all live in one place, the figures on the certificates tie to your Companies House filings and your balance sheet's equity — which is exactly what investors check in diligence.

You still confirm the current rules and limits with HMRC — that's not Ledgers' call to make. But the admin that usually trips founders up runs on rails.

What you'd actually do

You close your SEIS round. In Ledgers, you record the share issue, which prompts the SH01 and updates your cap table in one move. The compliance calendar tells you when the trading period clears and the compliance statement is due. You file it. HMRC authorises issue. You open the SEIS3 generator, and a clean certificate is ready for each investor — names and amounts already correct, straight from the cap table.

You email them out the same afternoon. Your investors get the relief they were promised, on time, with no errors. And you've quietly proved, again, that you're the kind of founder worth backing.

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Ready to stop dreading the SEIS/EIS paperwork? In Ledgers, the SEIS3/EIS3 generator builds each investor's certificate straight from your cap table — no retyping, no transcription errors — and the compliance calendar keeps every deadline on track. (Always confirm current limits and rules with HMRC.) See your numbers without learning accounting → start free.

Issuing the shares behind the raise? Here's the next step: How to issue shares and file an SH01 →

Mid-raise? Get the rest ready: How to answer investor due diligence → and the foundation, What is a cap table? →

Frequently asked questions

What's the difference between SEIS and EIS?

SEIS (Seed Enterprise Investment Scheme) is for the earliest, riskiest stage and offers investors the most generous relief, with the tightest limits. EIS (Enterprise Investment Scheme) is for slightly later companies, with less generous relief per pound but much higher limits. Many founders use SEIS first, then EIS for later rounds. Confirm current limits and rates with HMRC.

What is an SEIS3 or EIS3 certificate?

It's the document that lets your investor actually claim their tax relief. After you file your compliance statement and HMRC approves it, you issue each investor an SEIS3 (for SEIS) or EIS3 (for EIS). Without it, they cannot claim — so issuing these promptly and correctly is one of your key obligations as a founder.

Do I need advance assurance before raising under SEIS/EIS?

It's not strictly required, but you should get it. Advance assurance is HMRC's letter saying your company looks eligible, and angel investors routinely ask for it before committing. It removes a major source of their risk and makes your raise much easier.

What are a founder's main SEIS/EIS obligations?

Broadly: apply for advance assurance, stay within the scheme's rules and limits while you raise, file the compliance statement after issuing shares and meeting the trading period, and then issue each investor their SEIS3/EIS3 certificate so they can claim relief. Always confirm the current detailed rules with HMRC.

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