SEIS and EIS: Using Both Schemes in Sequence

SEIS and EIS are not rivals, and choosing between them is usually the wrong question. For a company they are a sequence: the Seed Enterprise Investment Scheme funds the first £250,000, and the Enterprise Investment Scheme takes over from there. For an investor they are two different prices for risk at two different stages. This guide walks the handover: how the schemes fit together, the order rules that catch founders, and the timing details that decide whether both reliefs survive.

SEIS and EIS in one idea

Both schemes reward people for backing young trading companies with income tax relief, capital gains treatment and loss relief. The difference is dose and stage. SEIS is the stronger medicine for the riskiest moment: 50% income tax relief, on up to £250,000 of lifetime company fundraising, for companies whose trade is under three years old with gross assets under £350,000 and fewer than 25 staff. EIS is the milder, larger follow-on: 30% relief, with company limits in the millions rather than the hundreds of thousands, for trades up to seven years old under the standard rules.

Read those numbers as a corridor. A company starts in the SEIS room, uses up the £250,000, and walks through the connecting door into EIS for the growth rounds. Most of the UK’s angel-backed companies that raise more than once make exactly that walk.

The order rule: SEIS money first

The sequencing rule that matters most is blunt: shares that need SEIS treatment must be issued before any EIS shares. Once a company has issued shares under EIS (or received investment from a venture capital trust), it cannot go back and raise under SEIS. The door locks behind you.

In practice this means a mixed round needs care. If investors in the same raise are split between SEIS and EIS, the SEIS shares are issued first, even if only by a day, and the paperwork must show it. Same-day issues have historically been treated by concession in some cases, but the safe, standard practice every adviser will give you is a clear date gap: SEIS shares on Monday, EIS shares on Tuesday. Cheap insurance against an expensive argument.

How the handover actually works

There is no application to move between SEIS and EIS. The handover happens naturally through the limits:

The company side. SEIS capacity is a lifetime £250,000, reduced by certain de minimis state aid already received. When a round would take total SEIS money past the cap, the excess simply cannot be SEIS shares; it is issued under EIS instead, provided the company meets the EIS conditions at that point. A company can hold advance assurance covering both schemes in one application, which is exactly what a founder planning a £400,000 raise should request: the first £250,000 under SEIS, the balance under EIS.

The investor side. The schemes have separate annual limits: up to £200,000 of SEIS subscriptions per tax year at 50%, and up to £1 million under EIS at 30% (£2 million where the excess is in knowledge-intensive companies). The same person can use both in the same year, in the same company, on the same day, provided the share issues respect the order rule.

A worked example

A company raising £350,000 with advance assurance for both schemes issues £250,000 of SEIS shares on the 1st of the month and £100,000 of EIS shares on the 2nd. An investor who put in £50,000 across both legs gets two certificates: an SEIS3 for the first tranche and an EIS3 for the second. If she subscribed £40,000 SEIS and £10,000 EIS, her income tax relief is £20,000 plus £3,000: £23,000 off her bill, provided she has that much liability. Three years of holding protects both sets of relief; the loss relief and capital gains layers then run per scheme, on the terms of each.

The differences that bite mid-sequence

Founders who treat EIS as “SEIS but bigger” get caught by the places the schemes actually differ. The trade age window is under three years for SEIS but seven for standard EIS, so a company can outgrow SEIS while remaining comfortably inside EIS. The money-use clock differs: SEIS requires the cash spent within three years of issue; EIS requires employment of the money in the qualifying activity within two years. Gross asset ceilings jump from £350,000 pre-issue for SEIS to £15 million pre-issue for EIS. And the risk-to-capital condition applies across both: HMRC must see genuine growth intent and genuine risk, not a scheme-shaped wrapper around a safe asset.

One more that surprises people: capital gains treatment on the way in. SEIS carries reinvestment relief, a permanent exemption of half the matched gain. EIS carries deferral relief instead: the gain is postponed, not forgiven, and comes back when the EIS shares are sold. Investors planning around an existing gain should understand which of those two they are buying. The detail lives in the CGT reliefs guide.

Planning the sequence as a founder

Three practical rules. First, apply for advance assurance covering both schemes at once if your raise might cross £250,000; it costs nothing extra and saves a second application mid-round. Second, protect your SEIS capacity: do not let a small early EIS issue, or a VCT cheque, lock the SEIS door before you have used the cheapest equity you will ever raise. Third, sequence the paperwork: SEIS shares first, dated cleanly, with board minutes and the share register telling the same story. The mechanics of a clean raise are in structuring the round and the four-step application guide.

Reading the sequence as an investor

The schemes price risk differently because the risk is different. SEIS backs companies at their most fragile, and the 50% relief with a 27.5p to 40p worst case (depending on your tax rate) reflects that. EIS companies are typically older with more evidence, and the 30% relief reflects that too. A portfolio holding SEIS and EIS together is spreading across stages, not doubling the same bet. The comparison across all three venture schemes, including VCTs, is in SEIS vs EIS vs VCT, and whether the whole package suits you at all is the subject of is SEIS worth it.

Sources

HMRC, Apply to use the Seed Enterprise Investment Scheme; HMRC, Apply to use the Enterprise Investment Scheme; HMRC Venture Capital Schemes Manual. Figures correct as at 17 July 2026 and checked against our rules and limits reference.