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Join for freePosted: Fri 3rd Jul 2026
As a business owner, you might have heard of the Seed Enterprise Investment Scheme (SEIS).
But at the same time, maybe you don't know how to access it, what sort of investment will qualify and, crucially, what the benefits are for potential investors?
By understanding SEIS, you'll be better prepared to engage it as a key part of your fundraising.
In this webinar, Matthew Gambold demystifies the scheme and explains how to use it to your advantage when attracting early-stage investment for your business.
How SEIS helps attract investors and what tax breaks they will receive
What investments qualify for SEIS
How to ensure your company is SEIS-ready
Matthew and his business partner Edward Sanford have spent the past decade and a half building a technology driven accountancy practice from scratch.
Along the way, he's built up a passion (some may say an obsession!) for supporting the small business community that's the engine room of the UK economy.
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Lightly edited for clarity.
Caitriona: Hello, everyone, and welcome to today's Lunch and Learn. My name is Caitriona, and I'll be your host today.
For those of you attending a Lunch and Learn for the first time, Enterprise Nation is a vibrant community platform for start-ups and small businesses.
I'm pleased to introduce Matthew Gambold, who's the co-founder of ChadSan. In this session, Matthew demystifies the Seed Enterprise Investment Scheme and explains how to use it to your advantage when attracting early-stage investment for your business.
If you have any questions throughout the webinar, please post them in the chat, and we'll do our best to answer them at the end of the session.
Today's webinar will be recorded, and we'll send a follow-up email with the recording and further resources later today. Over to you, Matthew.
Matthew: Thank you, Caitriona, and thank you very much to Enterprise Nation for hosting this.
Good afternoon, everyone. This is very odd, not being able to see anyone I'm speaking to, but I will proceed accordingly. Thanks very much for coming along to this webinar this afternoon.
Very brave of you on a Friday afternoon to be looking at complex tax issues, but I'm going to try to demystify the SEIS scheme for everyone as much as possible.
The topic is: what can the Seed Enterprise Investment Scheme do for my business?
First of all, who am I? I'm Matthew Gambold. I'm the co-founder of a firm of accountants called ChadSan. We're a team of 30 people across offices in Guildford, London, Southend and Bristol. My business partner, Ed Sanford, and I started the business 15 years ago and built it up from scratch.
We specialise in supporting small businesses. My business partner and I took a step back in August last year from the day-to-day running of the business.
Having built up a passion for small business, being a small business owner myself and having worked with small businesses, I now spend most of my time talking to small business owners and finding ways to support them, such as this webinar.
Firstly, a very quick slide on SEIS versus EIS. SEIS, the Seed Enterprise Investment Scheme, which is what this talk is about, is slightly different to EIS.
The tax benefits are largely the same, and the qualification criteria are similar. I guess the thrust of it is that EIS is aimed at bigger investments with bigger, more established businesses.
EIS tax breaks are slightly less generous, particularly the income tax relief, which is the headline tax relief that you get. That is 30% rather than 50%. We'll look at what that 30% and 50% means in a second.
You can raise a lot more through EIS than SEIS. A company can raise a maximum of £250,000 in total under SEIS, but there is a lifetime limit of £40 million for knowledge-intensive companies under EIS.
You can raise under SEIS and EIS. Often, a company will raise under the more generous SEIS early in its life and then move on to EIS investment.
More established companies can qualify for EIS. SEIS investment has to be raised within the first three years of a trade, but EIS can be anything up to 10 years, or even longer if it qualifies for something called follow-on funding.
But this presentation is specifically about SEIS. I will probably run another one on EIS further down the line if there is some demand for it.
What tax breaks does my company get from SEIS?
I have to apologise for the formatting of these slides. If anyone can tell me how to get rid of the shadow on these slides, that would be much appreciated.
But you will see that the tax breaks your company gets from SEIS are absolutely none.
This is not a tax break for the company being invested into. It's a tax break for the people investing into the company.
But those tax breaks are so generous that it's a bit of a no-brainer if your company qualifies for SEIS and EIS, which we'll look at in a minute.
If you get that qualification, it means that the risk for investors is far lower because of the tax breaks available. So it makes your company a lot more attractive as an investment vehicle for those investors and seed investors.
I think the best way to explain how SEIS works is to run you through a quick demonstration.
Assuming the investment in your company qualifies throughout, and I as an investor qualify, and we'll come on to those qualification criteria later, this is how it works.
Step number one: I decide that I like what you're doing, and I'm going to invest £10,000 into your business.
If that business and that investment qualifies for SEIS, I am eligible for 50% of that £10,000 back as a tax credit through my tax return.
So I can claim £5,000 back against my income tax liability for the tax year of the investment. Or, if I want to, and there are various reasons why you might want to, I can carry that back to the previous tax year.
So if I invest today in July 2026, I can either claim the tax relief in the year ending 5 April 2027, or I can carry it back and claim it in the year ending 5 April 2026.
If the investment then fails, normally, if you invest £10,000 in a company and lose your money, that's called a capital loss, and you can only set that against other capital gains.
So you would have had to invest in another company and made a gain in order to get any sort of tax relief for that loss.
If it's an SEIS investment and it qualifies, you can set that loss against your income. If I'm a 40% taxpayer, I can save another £2,000 worth of tax if, unfortunately, the investment fails and I lose my money.
On the flip side, if the investment succeeds and I sell the shares for more than I invested, I pay absolutely no tax on the gain.
If this wasn't an SEIS qualifying investment, and I bought for £10,000 and sold for £20,000, I would pay a minimum of 18% tax, and that's if I qualified for another tax relief called Business Asset Disposal Relief.
I would pay a minimum of 18% tax on that £10,000 gain. If it's an SEIS qualifying investment, I pay no tax at all.
So on the downside, if I lose my money, I can set it against my income. On the upside, if I make a profit, I don't have to pay any tax on it.
That means I invest £10,000, which your company receives. There is no tax on investment coming into your company, so you don't pay any tax. You receive that £10,000 in its entirety.
In theory, I'm only risking £3,000 because I get £5,000 back as a tax credit when I invest, and if I lose my money, I get another £2,000 of tax relief.
All of a sudden, you're receiving £10,000 and I'm risking £3,000. It's a far more attractive investment proposition for me.
And if the investment succeeds, as well as the £5,000 tax credit I got in the first place, I don't pay any tax at all on the gain.
There's also a little bit of a bonus tax relief at the end: 50% reinvestment relief.
What this means is that if you've sold some shares that didn't qualify for SEIS and made a taxable gain on them, and then you take that gain and reinvest it into an SEIS investment, it reduces the capital gains tax you pay on the gain you made by 50%.
So you get an extra tax relief on top of all the other reliefs on the actual SEIS investment itself.
What criteria does a company need to meet in order for an investment into it to qualify for SEIS?
I'm going to look at it from the company side first, and then we'll look at the investor side and what the investor needs in order to qualify.
Firstly, it needs to be newly issued shares. It's no good if you're buying shares from an existing shareholder. That doesn't qualify.
The SEIS shares have to be newly issued shares paid for in cash. That's one to really look out for.
Sometimes clients will come and say: "Someone lent me money two years ago, and it's been sat there. They're going to convert it into equity. Can I claim SEIS on it?"
Generally, no. If it's the conversion of a loan into equity, that doesn't qualify for SEIS.
It's a bit of a grey area because quite often investors will put their money in and wait for the paperwork before it converts into shares, and that's usually fine.
But if it's out there for any period of time, the risk is that HMRC will say it's a loan being converted into shares, which doesn't qualify.
The other thing is that those shares have to have the same rights as all the other shareholders. You can't issue shares to an SEIS investor that have better rights over dividends or better rights if the company is sold.
There are certain things that you can do to the share capital to make it slightly different to other shares, but the crux of it is that the SEIS shares have to carry the same sort of rights as all the other shareholders have.
The next thing is control. The company being invested into cannot be a subsidiary, so it can't be controlled by another company.
If you've got a parent company and subsidiary company relationship, that subsidiary company won't qualify. The investment has to be into the parent company.
Equally, it shouldn't control another company unless the subsidiary is a qualifying subsidiary.
So if you've got an investment into a parent company, any subsidiaries it has must be qualifying subsidiaries. Those subsidiaries have to be carrying out an SEIS qualifying trade.
You can have groups of companies. Generally, SEIS will be a single standalone company. You can have groups, but you need to be careful about whether all the subsidiary companies of the company being invested in qualify for SEIS.
A very important qualification criterion for SEIS, which I mentioned earlier, is that the trade, not the company, has to be less than three years old.
Why do I say not the company? You may incorporate a company ready to carry out a trade, and it may sit dormant for six months. The clock doesn't start ticking while the company is doing nothing.
There are also certain pre-trade activities that you can carry out. If it's a bit of research and development or looking into whether the trade is feasible, that shouldn't start the clock either.
The clock starts ticking not when you make your first sale, but when you start working towards developing a product or service that is going to result in sales. That's when the trade officially starts.
Again, it's down to interpretation. But if you're going to raise SEIS investment, make sure you don't leave it too late between starting to trade and looking to raise that investment.
The next one is fairly straightforward. The company has to have fewer than 25 employees. This is an investment relief for small start-up companies, so if you have more than 25 employees, you don't qualify.
The company must have less than £350,000 in gross assets immediately before the raise.
Gross assets are any assets, fixed assets, machinery, cash and amounts owed to you. It has to be less than £350,000 at that point.
Often, SEIS is raised right at the start, where assets are going to be below that level, but you need to be careful.
It can have more than £350,000 after the raise. So if you've got £200,000 worth of assets and you raise £200,000 in SEIS investment, then that's fine. It's just immediately before the raise that you shouldn't have those assets.
The company must carry on a qualifying trade. That means a genuine commercial trade with a view to profit. Charities don't qualify, and very sadly, accountants don't qualify.
There are certain excluded trades, including banking, insurance, accountancy, legal, property development, hotels, farming, energy generation and investment activities.
That accountancy exemption is extremely unfair in my view, but I guess they don't want professional service firms who are very familiar with the scheme to benefit from it and potentially bend the rules.
That's the company qualification criteria.
Next up is investor qualification. You've got a company. The company qualifies. It's looking to raise investment.
Firstly, the investor has to be an individual, not a company. This is a tax relief for individuals.
So if you've got your own company, and the company is investing into an EIS or SEIS venture, it won't qualify. These tax reliefs are against your personal tax.
Secondly, the most important one: you must not have control over the company.
Quite often, founders of companies will ask: "Can I invest my money and claim SEIS?" The answer is almost certainly no, because you control that company.
The definition of control for SEIS is if you hold more than 30% of the shares, and that includes shares held by close relatives.
Close relatives are spouses or civil partners, and anyone in your direct line of ascendancy or descendancy. So children, grandchildren, great-grandchildren, parents, grandparents and great-grandparents all count as close relatives.
If you've got 20% of the company and your spouse has 20% of the company, you fail that control test because, for the control test, it looks at the total amount held by you and your close relatives.
Interestingly, and people will have different views on this depending on the relationship they have with their siblings, siblings are not close relatives.
So if you've got a sibling who's got a very exciting business venture and you want to invest money into it, then as long as you are in no way controlling that company, either through the 30% ownership or through the second test, which is being an employee of the company, you can invest in your sibling's company and qualify for SEIS relief, and vice versa. Your sibling can invest into you.
The technical term is associates, and for this purpose it generally means spouses and direct relations.
The next point is that you must hold the shares for three years from the issue date.
So you've invested your £10,000. You've got your £5,000 SEIS relief, which is great. Then two years down the line, the company does extremely well and sells for £20,000.
Great news for you, but you no longer qualify for SEIS. You have to pay that £5,000 tax relief back.
So it's important that the shares are held for a certain period of time. If there's an exit and you have a choice over whether to sell, you need to weigh up whether to sell and lose the relief, but get the gain, or stick it out and hopefully get a bigger gain while retaining the relief you have on that gain.
It's important to say that there are certain events, such as the company going into liquidation. If it's a genuine business failure, then that doesn't count. If it fails within the three years, and it's a genuine failure, you don't lose the relief.
But if you've got any return of capital or any potential return of capital within the three years, then the investment is no longer going to qualify.
There's a bit of a nuance here. It's three years from the issue date of the shares or the trade commencement date.
So if a company raises money through SEIS and you invest, but it doesn't start trading for four months, then the three-year clock starts ticking from the date it started trading, rather than the date you made the investment.
The final one, which is often missed, doesn't necessarily mean that you don't qualify, but you have to have a UK tax liability in order to claim the tax relief back.
This isn't a case of, going back to that example, I invest £10,000 into your business and get a £5,000 tax credit.
If I haven't got a £5,000 tax liability either in the year I invest or the previous year that I can carry it back to, then I lose that £5,000 tax advantage.
I can't claim that cash from HMRC. It reduces my tax bill rather than being paid to me in cash. That's important.
Non-residents of the UK can still qualify for SEIS investments if they have UK tax liabilities, but they're less likely to have UK tax liabilities if they're not resident.
Equally, I had an instance where a client of ours sold their company for a lot of money, went out and started investing in lots of SEIS companies, but was living off the capital from that share sale. They didn't actually have any taxable income.
They came to me and said: "I've got all this tax relief to claim."
We had to quickly generate some dividends and salaries in order to create a tax liability they could claim that tax relief against, because there was no tax liability there in the first place. So that's one to look out for.
How can I spend the money? When I say "how can I spend the money?", I mean you as the business owner or company owner that raised that investment.
The important thing here is that the money you raise through SEIS must be spent on growing the qualifying trade.
Things like product development, building a team and marketing, all those things you spend money on in order to grow your business, are fine.
What you can't spend it on is returning any sort of value to the shareholders.
So if you're paying dividends to the shareholders, buying out other shareholders or just putting the money into a deposit account or investment portfolio to provide an investment return rather than a trading return, then that's going to disqualify SEIS.
Your investors will have to pay all the money back to HMRC, and they won't be very happy with you.
So you have to be careful. When you apply for SEIS, you need to set out approximately how you're going to spend the money. You need to tell HMRC your forecast and set out how you're going to spend that money, so you need to make sure you stick to those plans.
How does the application process work? You're pretty sure you've got a qualifying investment. What do you do next?
Step number one is an optional step: advance assurance.
Essentially, you fill in a lot of forms and send a lot of information to HMRC. You send your forecasts. You tell them how much you're aiming to raise through SEIS.
You now have to give the name of one potential investor. It used to be that you didn't have to name any investors, but I think HMRC got a lot of speculative applications and wanted to cut that out. So you have to have a named investor on that advance assurance application.
You explain everything about the company and when you started trading. HMRC will check that and give you advance assurance. They'll write a letter to you saying that, based on the information you've given them, the investment qualifies for SEIS.
A couple of really important things here: HMRC, as you can imagine, heavily caveats that advance assurance.
It essentially says it's only based on what you've told us. If there's stuff you haven't told them, or stuff that is incorrect, that could potentially affect your qualification further down the line.
We've had cases where it's a relatively straightforward form to fill in for advance assurance. But we've also had cases where clients have come to us and said to the investor: "Look, I've got advance assurance. This qualifies for SEIS."
The investor has done their due diligence and asked to see the application for advance assurance, and then said: "You didn't tell HMRC enough information for this advance assurance to be worth anything. I'm not going to rely on it."
So we then had to step in, reassure the investor and do a more thorough advance assurance. Like I say, it is optional, but it's often useful to do.
Number one, it helps you make sure you've got all your ducks in a row and that you're not falling foul of any of the rules.
Number two, it provides assurance to investors. You're a lot more likely to raise investment if you can go out to investors and say: "I've done my advance assurance, and HMRC has said this qualifies."
Number three, if you don't do it, as we'll see in a minute, you're going to have to do it further down the line anyway.
Step number two is raising the investment, issuing the shares, registering it at Companies House and all the normal company secretarial stuff.
Step number three is submitting an SEIS1 compliance statement to HMRC.
If you've already received advance assurance from HMRC, that SEIS1 is a lot more straightforward because you have a reference for your advance assurance. You put that on the form, and you only have to tell HMRC if anything has changed significantly from the point that you gained that advance assurance.
If you haven't done advance assurance, then you effectively have to do all the work of advance assurance as part of that SEIS1 application. So you're just kicking the can slightly further down the road.
If you're definitely going to raise SEIS investment, my recommendation would be to get an advance assurance in. The caveat is that HMRC is slow.
Once you've pulled the advance assurance together, either yourself or with your adviser, and sent it off to HMRC, how long they take to get back is a piece-of-string question.
Sometimes it's weeks, sometimes it's months. HMRC is pretty slow in all areas.
I'd say probably three months is the longest it usually takes, but there's no guarantee that it won't take longer than that, and that can hold up your investment.
You've raised your investment, filled in the SEIS1 and sent it to HMRC. HMRC has checked it.
The next step is that they send you an SEIS2 form, which is essentially an authorisation saying: "Yes, we've checked everything. Your investment qualifies."
Alongside that SEIS2 form, they will also send you a number of SEIS3 certificates. These are the certificates that you fill in with your investors' details.
They will have a reference from HMRC saying that the investment qualifies. You send the certificates to your investors, and they can use those certificates to claim their tax relief through their Self Assessment tax return.
That is the SEIS scheme and process. I know we're going to hand over to Caitriona for questions.
Just to let you know, as I said, I spend most of my time at the moment talking to small business owners and supporting them.
There's a page on the ChadSan website. If you scan that QR code, or I think Caitriona is going to send the link to you all in the chat as well, that links to a landing page where you can book an appointment with me through my Calendly link to talk about various different things to do with small business and growing a small business, one of which is SEIS and EIS.
This has been a bit of a whistle-stop tour. If you want a bit more information and to ask me questions directly, please feel free to go to that page and book an appointment.
Thank you very much for listening.
Caitriona: Thank you, Matthew. We've had a few questions come in, so let's start with this question from Anisha.
They're asking: "Based on average pre-seed closing round in the current market, and we want to have both SEIS and EIS together, is that possible?"
Matthew: Yes, absolutely. Quite often, if someone is raising more than the £250,000 SEIS limit, you will do a joint advance assurance application.
The tricky bit is deciding who gets the SEIS, which is slightly more generous, and who gets the EIS.
Normally, it's on a first come, first served basis. But absolutely, you can raise EIS and SEIS.
There are some nuances with EIS, but the advance assurance process and the whole process are very similar to SEIS. You just drop the S off the names of the forms. So yes, they can be done together.
Caitriona: Thanks. The second part of the question was: "They have different services and product lines. Could they use SEIS for each of those?"
Matthew: Unfortunately, no. An SEIS application is for the company.
If there's some way of grouping all of those trades together, and they all qualify, have been carried on for less than three years, and you do one SEIS application for all of them together, that's fine.
But you are limited to that £250,000 across the company because that's a company limit.
If you wanted to do separate applications and raise £250,000 for each, you would need to have separate companies because one of the criteria is that the company has not carried on a different trade to the one you're raising the SEIS money for.
Unfortunately, you can't do lots of SEIS applications for lots of trades in a single company. It would have to be separate companies.
Caitriona: Thank you. A question from Om. They're asking: "Hi, Matthew. We have everything in place with our SEIS and have the certificate. In your experience, where is the best place to start talking to SEIS-ready investors?"
For further context, they said they have £250,000 SEIS and £150,000 EIS, and would like to focus on individuals as opposed to funds.
Matthew: It depends on your circumstances and your business, but often with these early-stage investments, friends and family are the best place to start.
If you go out to your existing network, your contacts and your family, obviously bearing in mind the close relations point, so not your parents or grandparents, but maybe your cousins or siblings, you can tell them and get them excited about your idea.
Explain the tax breaks to them. I think the best way to explain it is in terms of risk.
If you explain that if they invested £1,000, they're only really risking £300 because of those tax breaks, all of a sudden something that looks like a risky investment becomes a lot less risky. I would start with those people.
There are lots of good angel networks out there as well. Southeast Angels is one that's worth looking at and that we deal with. I went to their roadshow in London yesterday, actually, focusing on fintech companies.
There are lots of little angel networks that are interested in SEIS qualifying investments, but your existing contacts and network are the best place to start.
Caitriona: Thank you. A follow-up question to that is: "You mentioned not to use investment for dividends and liquidity. Does that include basic wages for the founders?"
Matthew: No. Basic wages for the founders are fine. Salaries, recruitment and all of that are no problem at all.
No dividends. Often, SEIS qualifying companies can't pay dividends anyway because they haven't made a profit yet.
But if they do get off to a flying start and have profits, it's important not to pay those profits out as dividends.
You could potentially argue that you're paying the dividends out of the profits rather than out of the investment, but it's a difficult one. You could get yourself into a difficult conversation with HMRC.
Caitriona: A follow-up question from Craig: "Do in-laws count as family?"
Matthew: No, in-laws don't count as family. You can raise investment from your in-laws, no problem.
It's literally just direct descendants, direct ascendants, if that's the right word, and your spouse or civil partner. In-laws are fine.
Caitriona: Thank you. We're coming towards the end of the session, but we have time for one final question from Amanda.
They're asking: "If you get your application into HMRC before the three-year trading deadline, will it still be eligible if HMRC take time to process that and it goes beyond the deadline?"
Matthew: Unfortunately, no. The deadline is based on the date that you issue your shares, and HMRC's answer to that would be that you don't have to have advance assurance.
If you've left it up to them, that will be their excuse for dragging their heels. I know it doesn't sound fair.
But if you're confident that the company qualifies, you can raise that investment without advance assurance.
If you raise the investment after the three-year window, and if you issue the shares after the three-year window, then it's not going to qualify.
Caitriona: Thank you. We've come to the end of the session now, but please do connect with Matthew.
I've dropped the links into the chat for his Enterprise Nation profile, LinkedIn profile and also that link to book in a call. Please do take advantage of that if you want to explore this topic further.
Thank you, Matthew, for your presentation today. Thanks everyone for joining us. We'll share the recording and further resources in a follow-up email this afternoon.
Matthew: Thank you, everyone.
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