The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are UK government-backed initiatives designed to encourage investment into early-stage startups by offering generous tax reliefs to investors.

Getting approval under these schemes can make your startup far more attractive to angel investors. But SEIS/EIS approval isn’t automatic. Your company’s structure, both legal and operational, plays a key role in whether HMRC gives the green light.

1. Choose the right company type

To qualify for SEIS or EIS, your business must be a UK-registered, unquoted company. In most cases, this means a private limited company (Ltd). LLPs, overseas companies, or structures without a UK permanent establishment will not qualify. HMRC expects your business to be based in the UK and carry out qualifying activities from there.

2. Keep your share structure simple

SEIS and EIS investors must receive ordinary shares that are fully paid in cash and carry no preferential rights. This rules out preference shares, convertible notes, or shares with guaranteed returns or capital protection.

If you're using different share classes, for example to separate founders and investors, be cautious. HMRC will check whether any class of shares offers special rights that could breach the rules. A single class of ordinary shares is usually safest unless your legal team is confident in structuring alternatives.

3. Avoid disqualifying ownership structures

The company raising investment must not be controlled by another company. It also cannot control another company unless it is a qualifying 90% subsidiary. Holding companies or overseas arms can cause issues. A simple group structure with your trading company as the central entity is usually best.

4. Check that your business activities qualify

Some sectors are excluded from SEIS and EIS, including banking, insurance, property development, legal services, leasing, and energy generation. If you operate in a borderline area like fintech or proptech, you will need to show that most of your revenue comes from qualifying activities. For example, a fintech startup developing its own software may qualify, while one earning fees from financial brokerage may not.

5. Understand the age limits

For SEIS, your company must be less than three years old when the shares are issued. For EIS, the limit is seven years, or ten if you are a knowledge-intensive company. The timeline starts from your first commercial sale, not your incorporation date. This gives pre-revenue startups more flexibility than they might expect.

6. Plan how the funds will be used

HMRC requires that funds raised under SEIS or EIS are used for qualifying business activities. For SEIS, the money must be spent within three years. For EIS, the deadline is two years. Using the money for overseas expansion, loan repayments, or non-qualifying R&D may risk compliance. You will need a clear growth plan that shows how the funds will support your business.

7. Think long term, not just today

Meeting the criteria today is not enough. HMRC wants to see that your company will remain compliant in the future. Your business plan, cap table, and legal structure should reflect this. That is why many investors ask to see HMRC Advance Assurance before investing. It shows you have done the work to get SEIS or EIS approval and intend to stay on track.

In summary: SEIS and EIS are not just tax schemes. They are tools to help you unlock investment and show the market you are a credible, investor-ready startup. Structuring your company with this in mind from day one will give you the best chance of success.