If you're raising money for an early-stage startup in the UK, you need to understand SEIS. It's one of the most powerful tools available to founders — and most people outside the investment world have never heard of it.
At Akcela, helping founders navigate the SEIS process is one of the core things we do during incubation. We've seen first-hand how it transforms fundraising conversations. Here's everything you need to know.
What is SEIS?
The Seed Enterprise Investment Scheme is a UK government initiative designed to encourage investment in early-stage companies. It works by offering significant tax relief to investors who back qualifying startups.
For investors, the incentives are substantial: up to 50% income tax relief, capital gains tax exemption on profits, and loss relief if the company fails. That means an investor putting £10,000 into an SEIS-qualifying company effectively risks only £2,250 after tax reliefs. No other investment vehicle in the UK offers anything close to that level of protection.
For founders, the effect is transformative. SEIS makes your company dramatically more attractive to angel investors. It de-risks their investment in a way that no pitch deck or financial model can match.
SEIS vs EIS: what's the difference?
SEIS and EIS are related but different schemes. Understanding both matters because they apply at different stages of your company's growth.
SEIS (Seed Enterprise Investment Scheme) is for the earliest stage. Companies can raise up to £250,000 under SEIS, and investors receive 50% income tax relief. The company must have fewer than 25 employees and less than £350,000 in gross assets.
EIS (Enterprise Investment Scheme) kicks in after SEIS. Companies can raise up to £5 million per year (and up to £12 million over the company's lifetime) under EIS. Investors receive 30% income tax relief — less generous than SEIS, but still significant. EIS companies can have up to 250 employees and up to £15 million in gross assets.
Most Akcela portfolio companies start with a SEIS round and then move to EIS as they grow. The two schemes are designed to work in sequence, creating a tax-efficient funding path from pre-seed through to growth capital.
| Feature | SEIS | EIS | |---------|------|-----| | Maximum raise | £250,000 | £5 million per year | | Income tax relief for investors | 50% | 30% | | Capital gains tax exemption | Yes | Yes (if held 3+ years) | | Loss relief | Yes | Yes | | Maximum company age | 3 years | 7 years | | Maximum employees | 25 | 250 | | Maximum gross assets | £350,000 | £15 million |
Does your company qualify?
Most early-stage tech companies will qualify for SEIS, but there are specific criteria to meet:
- Your company must be less than three years old
- It must have fewer than 25 employees
- Gross assets must be under £350,000 before the investment
- The company must be carrying on, or preparing to carry on, a qualifying trade
- You can raise a maximum of £250,000 through SEIS
- The money must be used for the qualifying business activity within three years
Certain trades are excluded — property development, financial services, and legal services among them — but the vast majority of tech-enabled startups qualify.
How Akcela portfolio companies have used SEIS
SEIS isn't theoretical for us. Multiple companies in the Akcela portfolio have raised successfully through the scheme:
Glowfrog Games closed a £100,000 SEIS round to fund development of their first commercial title. For an indie games studio in Norwich, SEIS was the difference between being able to hire developers and staying stuck at the prototype stage.
Aidos Protects raised £250,000 via SEIS — one of the larger SEIS rounds we've supported. That capital funded their product development and first enterprise sales, taking them from concept to real customers.
Moss Monkey Games also completed their SEIS round through the programme. In each case, the SEIS tax relief was the primary reason angel investors came to the table.
Across the portfolio, Akcela-incubated companies have raised over £2.2 million in investment. SEIS has been central to nearly every one of those raises.
How to use SEIS in your fundraise
At Akcela, we help our portfolio companies through the SEIS process as part of the incubation programme. The key steps are:
1. Get advance assurance from HMRC. Before you start raising, apply to HMRC for advance assurance that your company qualifies for SEIS. This gives potential investors confidence that the tax relief will be available. The process takes 4-6 weeks and costs nothing.
2. Structure your round properly. Work with your legal advisers to set up the right share structure. At Akcela, we work with Ashtons Legal — they've structured multiple SEIS rounds for our portfolio companies and understand the compliance requirements.
3. Lead with SEIS when you pitch. When you talk to angel investors, put SEIS eligibility front and centre. It's a genuine differentiator. Many angels — including those in Anglia Capital Group, our partner angel network — will specifically filter for SEIS-qualifying opportunities.
4. Issue compliance certificates after investment. Once the investment is made, you need to issue SEIS3 compliance certificates so investors can claim their tax relief. Your accountant or legal adviser handles this, but it's your responsibility to make sure it happens promptly — delays here damage your relationship with investors.
What investors actually get from SEIS
When you're pitching, it helps to understand exactly what your investors receive. Here's the breakdown for a £10,000 SEIS investment:
- 50% income tax relief: The investor claims back £5,000 against their income tax bill, reducing their effective outlay to £5,000
- Capital gains tax exemption: If your company succeeds and the investor sells their shares at a profit, that profit is completely free from capital gains tax (as long as they've held the shares for at least three years)
- Loss relief: If the company fails, the investor can offset their net loss (£5,000 after the initial tax relief) against income tax. At 45% tax rate, that recovers another £2,250 — meaning their total exposure on a £10,000 investment is just £2,750
This is why SEIS is so powerful. For angel investors, it turns a high-risk startup investment into something where the downside is genuinely manageable.
Common mistakes to avoid
Having guided multiple companies through SEIS raises, we see the same mistakes come up:
Not getting advance assurance first. Some founders start raising without it, then discover issues during the process. Get your HMRC assurance in place before you have a single investor conversation.
Spending the money on non-qualifying activities. SEIS funds must be used for the qualifying trade. If you spend it on something outside the scope, you risk the entire SEIS status — and your investors lose their tax relief. Get clear guidance from your accountant.
Treating SEIS as the pitch. SEIS is a powerful incentive, but investors still need to believe in you and your business. The tax relief gets them to the table; your product, team, and market need to keep them there.
Leaving compliance certificates too late. Investors want their tax relief. Issue the certificates quickly. Slow paperwork signals a poorly run company.
The bottom line
SEIS isn't a nice-to-have. For early-stage founders raising from angels in the UK, it's essential. If you're building a tech-enabled company and you haven't explored SEIS, you're leaving money on the table — and making your company unnecessarily hard to invest in.
If you want help navigating the process, get in touch or apply to Akcela's incubation programme. SEIS guidance is one of many things we work through with our founders, alongside product-market fit, team building, and everything else it takes to get a company off the ground.
You can also learn more about what a business incubator does, read about angel investing in Norwich, or explore startup investment opportunities in Norfolk.
