Search "SEIS explained" and you will find a hundred articles that read like a tax return. Boxes, thresholds, clawback clauses, the lot. They are written by accountants for accountants, and they miss the only thing that matters to you as a founder.

SEIS and EIS are not tax admin. They are the single most powerful closing tool you have when you raise from UK angels. Used well, they change the question in an investor's head from "can I afford to lose this?" to "can I afford not to be in?" I spent my career on the capital side, and I can tell you the reliefs move the decision more than almost anything else in a pitch. Most founders treat them as paperwork to sort out afterwards. The good ones use them to get the cheque signed.

Here is how they actually work, and how to use them.

What SEIS and EIS actually are

Both are UK government schemes designed to push private money into early-stage companies by handing the investor generous tax relief. That is the whole point: the state takes on a chunk of the investor's downside so that backing a risky young company becomes a sensible bet rather than a gamble.

The crucial thing to understand is who the relief is for. It is for your investor, not for you. It does not put cash into your company directly. What it does is make your shares dramatically more attractive than they would otherwise be, which is exactly why it is a tool you wield, not a form you file.

There are two schemes, for two stages.

The number that closes the deal

Let me show you the maths that does the work, because this is the bit founders never lead with and always should.

Take an angel considering a £10,000 SEIS investment, who pays tax at the higher rates.

• They invest £10,000.

• SEIS gives 50% income tax relief, so £5,000 comes straight back. Their real money at risk is now £5,000.

• Suppose the worst happens and the company fails. They claim loss relief on the £5,000 still at risk. At a 45% marginal rate, that is another £2,250 back.

• Total recovered in a total failure: £7,250.

So the most an angel can actually lose on a £10,000 SEIS bet is £2,750. Just 27.5p in the pound. That is the sentence that gets an angel over the line, and most founders never say it.

Now flip it. The upside is untouched. If the company does well, gains on SEIS shares held for at least three years are free of capital gains tax entirely. Capped downside, uncapped and untaxed upside. That is a genuinely unusual risk profile, and it exists because the government engineered it to.

SEIS first, EIS second

The two schemes map onto two stages of your company's life.

SEIS, for the earliest money

SEIS is for the very start. The headline terms:

• 50% income tax relief for the investor

• Investors can put in up to £200,000 a year

• Your company can raise up to £250,000 under SEIS in total, across its life

• You must be trading for less than three years, with under £350,000 in gross assets and fewer than 25 employees

One useful quirk: unlike EIS, your directors can invest under SEIS and claim the relief themselves. A co-founder putting in their own money can take the 50% too.

EIS, for the rounds after

Once you outgrow SEIS, EIS takes over:

• 30% income tax relief for the investor

• Investors can put in up to £1 million a year, or £2 million if some of it goes into knowledge-intensive companies

• From April 2026, the company limits roughly doubled. You can now raise up to £10 million of EIS a year, and up to £24 million over the company's life

The order is not optional. SEIS must come first. Once you have taken EIS or VCT money, you can never go back and use SEIS. So if you are eligible for SEIS, use it before anything else touches the cap table.

How to actually use this when you raise

Knowing the rules is not the same as using them. Three things separate founders who get real value from the reliefs from those who just mention them in passing.

Get advance assurance before you pitch, not after

Advance assurance is HMRC confirming, in writing and in advance, that your share issue is likely to qualify. To an angel, this is the difference between your word and the taxman's. Walk into a pitch able to say the relief is already confirmed, and you have removed the single biggest doubt in their head. Turn up promising to sort the SEIS out later, and you have left it as a risk they have to price in. The application is free, and you can do it before a single investor has committed. Do it first.

Lead with the downside, not the scheme name

Most founders say "we're SEIS eligible" and move on, as if the acronym does the work. It does not. The 27.5p figure does. Walk your investor through the actual numbers on the actual amount they are considering. Make the capped downside concrete and personal. That is what shifts the decision.

Make it easy to claim

After they invest, the investor needs an SEIS3 certificate from you before they can claim a penny. Get the compliance paperwork to HMRC promptly so those certificates land. An angel who has had a smooth, fast claim is an angel who invests in your next round, and tells their syndicate about you.

The rules founders get wrong

The relief is strict, and a few honest mistakes can disqualify the whole thing. The ones I see most:

• The shares must be ordinary, full-risk shares. You cannot give SEIS investors preference shares, guaranteed returns or downside protection. The investor has to take the same risk as you. Try to sweeten the deal with preferential rights and you void the relief.

• The relief only helps UK taxpayers, and only up to their actual tax bill. An investor with no UK income tax liability gets nothing from it. Know who you are pitching.

• Certain trades do not qualify, including finance, property development, and legal and accountancy services, among others. Check your trade is eligible before you build your raise around the relief.

• Miss the three-year trading window for SEIS and the door simply closes. If you are approaching it, do not delay your raise.

What the relief will not do

I would be doing you a disservice if I left you thinking SEIS is a magic wand. It is not.

It reduces an investor's downside. It does not improve your business, your traction or your team, and a sophisticated angel knows the difference. The relief makes a good company easier to back. It does not make a weak one fundable. If your numbers do not stand up, no amount of tax relief will rescue the pitch, and leaning too hard on it can even signal that you are hoping the tax tail will wag the investment dog.

Treat it as what it is: a powerful accelerant on a deal that already has merit. And before you get to that point, it is worth being honest with yourself about whether you should be selling equity at all. I wrote about that in when not to sell equity.

Used properly, SEIS and EIS are the closest thing UK founders have to a structural advantage when they raise. The relief is sitting there, designed specifically to make people say yes to you. Most founders leave it as an afterthought on the final slide. Put it to work instead.

If you want to know whether you are genuinely ready to put your business in front of an investor, our Funding Readiness Assessment is a straight, ten-minute check. No fluff, no sales pitch.

Figures correct as of June 2026. Tax reliefs change, sometimes at short notice, so confirm the current rules with a qualified adviser or on GOV.UK before you act on them.