The Seed Enterprise Investment Scheme has changed–and it is good news

Partner at Ashcroft Partnership, thoughtleader

Written By Dominic Anthony

After a tumultuous few months regarding the economy there’s reason for entrepreneurs and investors to be optimistic. The expansion of the Seed Enterprise Scheme (SEIS) announced in the 2022 early autumn “mini budget” has been retained by the government. Reaction to the expansion of the scheme has been wholly positive.  Originally scheduled to “sunset” in 2025, due to EU restrictions at its inception, the recent changes to the scheme have provided an opportunity to extend the timeframe of the scheme. We outline why this matters to businesses, investors, and the economy and what the benefits are.

What is SEIS?
Established in April 2012, SEIS is a share issue scheme that acts as a powerful incentive to encourage investors to financially back qualifying entrepreneurial businesses, in return tax relief can allow individual investors to potentially reduce their effective income tax liability, for the year in which they make the investment or the preceding year, to zero. The funding that is invested in the start-up, in return for shares, can be used to fund several programmes, hire staff for projects, to expand the research and development capabilities, invest in converting to a fully digital operation and much more.

The impact of SEIS
The UK is one of the world’s leading start-up ecosystems, in part, because of the current SEIS (and EIS) schemes allow typically young, innovative companies to raise funds to get going. These types of companies are ambitious and seek to find new solutions to everyday problems or create something new. With the current economic sentiment, alternative sources of investment, like angel investors and crowdfunding, are more vital than ever before to help get these emerging businesses off the ground.

Start-up stats
According to a report published in May 2021 by HMRC, available on, since SEIS was launched in 2012, 13 800 individual companies have received investment through the scheme and £1.4 billion of investment has been raised. Most companies, around 63% in 2019/20, receive investments of over £50 000 through the SEIS.

Investor numbers
In 2019 to 2020, 8665 investors claimed Income Tax relief on Self-Assessment forms for SEIS and the majority of the investors claiming the relief invested £10,000 or less into qualifying SEIS companies (58% of investors).

Is your company eligible to issue shares to investors, taking advantage of the scheme? 

Eligible companies must:

  • carry out a new qualifying trade,
  • be established in the UK,
  • not be trading on a recognised stock exchange at the time of the share issue,
  • have no arrangements to become a quoted company or a subsidiary of one at the time of the share issue,
  • not control another company unless that company is a qualifying subsidiary, and
  • not been controlled by another company since the date of your company being incorporated.

Your company and any of its subsidiaries must:

  • not have gross assets over £350,000 (from April 2023) when the shares are issued
  • not be a member of a partnership
  • have less than 25 full-time equivalent employees in total when the shares are issued
  • not have already issued EIS shares.

More information regarding exemptions and qualifications for SEIS can be found here. Before raising funding we advise that you consult HMRC to check that your share issue is likely to qualify, this is called advance assurance.

What are the changes?
The changes to the current scheme will be enacted in April 2023 and include:

  • a higher level of total investment – an increase from £150 000 to £250 000
  • a longer period of eligibility for raising SEIS funds – an increase from two to three years
  • an increase of gross asset allowance from £200 000 to £350 000


Why it matters
For startups in the UK, the decision to extend the scheme means that raising funds is more accessible and in return will increase the number of impact-driven and transformative businesses and generate wider positive impacts. We asked our associates at OnePlanetCapital to share their expert thoughts on the scheme,

As an early-stage company fund manager in the climate change space we were delighted to see the government continue to support tax advantaged investing and the fact that the scheme has been extended is excellent news for both investors and companies. One thing the UK does incredibly well is the regulation around the venture capital space, which allows generous tax break for investors using SEIS and EIS – the SEIS tax relief of 50% is incredibly attractive and when you add capital gains relief, inheritance tax relief, roll over relief and loss relief it becomes are very powerful asset class. As a result the UK has one of the most vibrant venture capital markets globally and this is essential in terms of building the economy we want in 10 or 15 years time.” Matthew Jellicoe, Founder, OnePlanetCapital

Final words

Expanding and extending the SEIS and schemes is encouraging investors to contribute to the economy and promote the UK’s reputation for innovation and entrepreneurship. It is the governments ambition to realise a British innovation hub, likened to Silicon Valley. As a Cambridge-based Accountancy firm, specialising in entrepreneurial clients, we operate in an area already called Silicon Fen. The extension of the scheme can only mean further investment in the innovative heart of the UK

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