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A Quick Guide to the Seed / Enterprise Investment Scheme in the UK

A Quick Guide to the Seed / Enterprise Investment Scheme in the UK

If you’re trying to raise capital for your startup in the UK, you need to understand how to make it palatable for your investors.

The UK has incredible tax relief schemes but if founders don’t know about them and haven’t made their businesses eligible, guess what? Investors can lose interest, fast.

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are the two schemes you need to get your head around ASAP.

Let us walk you through everything you need to know…


The Enterprise Investment Scheme (EIS)

Our friends at True Altitude (SME investment specialists) put together an excellent summary of what becoming EIS certified offers investors, which they’ve kindly let us pinch:

The EIS encourages investment in young and innovative businesses, helping smaller companies to raise funds and grow. One of four venture capital schemes the government offers, EIS can provide investors with up to 30% income tax relief, and also capital gains deferral, loss relief and tax-free growth. EIS investment also provides a degree of diversification while managing risk and mitigating tax liability.

We added some bold to the real showstoppers. Thirty percent income tax relief! Deferred CGT! Tax-free growth! These are significant incentives for investors.

If you’re an EIS company, there are two ways cash can flow in from investors. The first is by directly investing in a single EIS-qualifying company and the second is by investing through an EIS fund manager who has built a portfolio for the investor.

The maximum amount an investor can commit via the EIS is £1 million per tax year, or £2 million if the amount above £1 million qualifies as ‘knowledge intensive’ investments. As with most investments into startups, returns come from capital growth (and then exit) rather than dividends.

Seed Enterprise Investment Scheme (SEIS)


‍‍The SEIS is a scheme designed for even earlier-stage companies than those taking money under the EIS scheme.

You can accept up to £100,000 from an investor if you are SEIS qualified, each tax year.

Any early-stage investment is going to be perceived as riskier for investors. Because, frankly, it is. Investors are attracted to the promise of your idea, the dream of a 10x return and they’re willing to take a gamble. That being said, they want to protect their investment as much as possible.

The SEIS provides investors up to 50% of their investment in tax relief, as well as significant capital gains and loss reliefs. The HMRC has set a very specific list of requirements a company must meet to qualify for EIS.

True Altitude have done the legwork in providing a neat overview:

Under EIS, a company can raise up to £5 million each year, and a maximum of £12 million in its lifetime. The investment must meet the risk to capital condition, which means the company must use the money for growth and development.

If you’re an investor, we strongly recommend doing as much independent research as you can and seeking expert advice. You can read more about this on the HMRC website.

If you’re a founder, investigate your eligibility status - it could make all the difference when it comes to secure capital for your next raise.

And as always, Cake Equity is ready to make your capital raise seamless with workflows, cloud-based cap tables and best-practice legal templates.

Want to learn more? Check out these resources: ‍

True Altitude — Demystifying The Enterprise Investment Scheme

‍The Wealth Club — EIS Explained‍

GOV.UK — Apply For The Enterprise Investment Scheme‍

Growth Funders — Six Facts You Might Not Know About EIS Tax Reliefs

Cake Equity is always ready to make your capital raise seamless with workflows, cloud-based cap tables and best-practice legal templates.

This blog is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.

This article is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.

Charlie Ross
Chief Operating Officer

Charlie Ross is a founding member and the Chief Operating Officer of Cake Equity. In this role, Charlie takes the lead in ensuring everyone at Cake is happy, healthy, and hungry for more growth!

Before stepping into the COO role, Charlie served as Cake's Legal Counsel, supporting the company through many complex legal matters, drafting legal contracts, and providing legal support to startups across various industries. As Cake transitioned from a boutique law firm to a full-pledged SaaS platform, Charlie played a pivotal role in productionizing our equity offerings, raising capital, and bringing Cake to where it is today. Under his leadership, Cake has been able to focus on product-led growth and help more startups as the company expands into new markets.

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