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SEIS eligibility checklist for UK limited companies

Written for founders of young UK limited companies who are about to take angel money and need to know whether the Seed Enterprise Investment Scheme is actually open to them. It covers the company conditions, the trade conditions, the share rules, the spending rules, and what HMRC asks for at advance assurance. Around twelve minutes to read.

Updated 18 October 2026

12 min read

The short version

  • A company can raise up to £250,000 under SEIS in its lifetime, counting de minimis state aid from the previous three years.
  • Gross assets of £350,000 or less and fewer than 25 full time equivalent employees, both measured when the shares are issued.
  • The trade must be new and carried on for no more than three years, with excluded activities under 20 per cent of the business.
  • Shares must be new ordinary shares, paid for in cash, with no preferential rights, held for at least three years.
  • Advance assurance needs named investors and real amounts. HMRC turns away speculative applications with nobody on them.

What SEIS actually asks of you

If an angel has said the word SEIS and you are not sure whether your company clears the bar, work through this SEIS eligibility checklist before you issue a single share. The Seed Enterprise Investment Scheme gives individual investors income tax relief when they subscribe for new shares in a young company, and for most seed rounds it is the difference between an angel saying yes now and saying come back later.

The conditions sit in two halves. The company has to qualify on age, size, ownership and trade. The shares themselves have to qualify: newly issued, paid for in cash, no special rights, and bought by someone who is not too closely connected to you. Miss either half and the relief your investor was counting on can be refused at the time, or taken back from them years afterwards.

What follows is the full set of conditions in ordinary words, the spending rules that bite after the money lands, what HMRC wants to see in an advance assurance application, and the places founders most often lose the relief. Thresholds are HMRC’s as at October 2026, and the current guidance on gov.uk is always the version that counts.

The company tests you have to pass

HMRC looks at the company before it looks at anybody’s tax return. Each of these has to be true at the moment the shares are issued, not on the day you apply.

Size, ownership and independence

  • Gross assets of £350,000 or less across the company and any subsidiaries, measured immediately before the shares go out.
  • Fewer than 25 full time equivalent employees in the group at that point. Directors count towards the number.
  • A permanent establishment in the UK, meaning the real activity happens here.
  • Shares not trading on a recognised stock exchange, with no arrangement in place for the company to become quoted or to become someone else’s subsidiary.
  • No other company controls you, and none has done since incorporation. You may own a qualifying subsidiary, and you cannot be a member of a partnership.
  • No EIS or venture capital trust money already in the company. SEIS has to come first.

How much you can raise

£250,000 is the lifetime SEIS limit for the company, and it includes any de minimis state aid received in the three years up to and including the date of the investment. Innovation grants can count, so check what you have already had before you size the round. The same £250,000 also reduces the £24 million lifetime ceiling for later EIS and venture capital trust money, which only matters if you expect several scheme rounds ahead of you.

Sitting behind all of it is a continuing condition: the company has to keep following the rules for at least three years after each investment. Breach them inside that window and HMRC can withhold the relief or recover it from your investor, which is not a conversation you want to have with the person who backed you.

The trade and the three-year window

Three years, not two

The trade has to be new. If the company is already trading, that trade must not have been carried on for more than three years, whether by your company or by anyone who transferred it in, and neither the company nor a qualifying subsidiary can have carried on a different trade before the new one started. The window was two years until April 2023, so plenty of older guides, and a fair few accountants, still quote the shorter figure.

A qualifying trade

Most trades qualify. HMRC is looking for a trade run on a commercial basis with a view to profit. It fails where more than 20 per cent of the activity falls into the excluded list, which includes:

  • property development, and dealing in land
  • legal and financial services, banking, insurance, lending and money services
  • leasing and hiring out assets, including some subscription hardware models
  • farming and market gardening, hotels and nursing homes
  • coal and steel production, energy generation, producing gas or other fuel, and exporting electricity

Software, SaaS, hardware, consumer products, marketplaces and most service businesses sit comfortably inside the rules. The ones worth examining properly are anything that looks like lending, property, or renting an asset out by the month, because a company can describe itself as a technology business and still be, in HMRC’s reading, a financial services or leasing business. That judgement is better made before you promise an investor anything.

What the money can and cannot pay for

Spend it on the trade, within three years

SEIS money has to be spent within three years of the share issue on a qualifying trade, on preparing to carry on one, or on research and development expected to lead to one. Salaries, product build, marketing, equipment and the cost of getting to first revenue are all fine.

What it cannot do

  • Repay a loan, including a director’s loan or the bridge the founders put in to keep the lights on.
  • Buy shares in another company, unless it is a qualifying 90 per cent subsidiary that spends the money on a qualifying business activity itself.
  • Buy an existing trade, or the assets of one.
  • Buy land.

There is a timing point that catches people out at the other end. You cannot file the SEIS1 compliance statement until the company has either carried on the trade for at least four months or spent at least 70 per cent of the money raised. Until that form goes in and HMRC issues the SEIS2, you cannot hand your investors the SEIS3 certificates they need in order to claim. Angels who invested in April and are chasing certificates in January are usually chasing a company that has not yet met one of those two tests, or a founder who has not filed.

Keep the spending evidenced as you go. If HMRC asks later how the money was used, bank records mapped against the plan you filed are the answer that ends the question.

Share rules and who may invest

The shares

  • New ordinary shares, fully paid up in cash at the moment of issue. A promise to pay later does not count, and converting an existing loan into shares does not count either.
  • No preferential rights to dividends or to assets on a winding up. An investor asking for a liquidation preference has to be told, politely, that the preference and the relief cannot both exist.
  • No arrangement to buy the shares back, and no protection against the ordinary risk of the investment.
  • The investor’s name entered in the register of members.
  • Shares held for at least three years. Sell sooner and the income tax relief goes.

The investor

Income tax relief is given at 50 per cent of the amount subscribed, subject to the investor’s own tax position, with an annual limit per investor set out in HMRC’s current guidance. Gains on the shares can be free of capital gains tax after three years where income tax relief was claimed and not withdrawn, and loss relief is available if the company does not make it. That combination is why angels ask for SEIS by name.

Connection is where founders get caught. An investor must not be connected with the company in the two years before the share issue or the three years after it. Connected means holding more than 30 per cent of the ordinary share capital, the voting rights, or the assets on a winding up, counting associates such as a spouse, parents and children. A director can take SEIS relief; an employee generally cannot. So your co-founder usually cannot invest under SEIS, and nor can a family member whose stake pushes the family past 30 per cent.

Advance assurance and what HMRC expects

What advance assurance is

Advance assurance is HMRC saying that, on the facts you have given, a proposed investment looks as though it would meet the scheme conditions. HMRC is explicit that it covers certain conditions only, that it rests entirely on what you told them, and that it is not an endorsement of the business or confirmation that a particular investor qualifies. Investors still ask for it, because it moves the conversation from your opinion to HMRC’s.

What goes in the application

  • Named potential investors and the amounts they intend to put in. Applications with nobody named on them are treated as speculative and sent back.
  • The business plan and financial forecasts.
  • Latest accounts, if the company has filed any.
  • The memorandum and articles, plus any draft subscription or shareholders’ agreement.
  • Details of any other venture capital scheme money and any de minimis state aid received.

A director, the company secretary, a trustee or an agent may submit it. Where an agent files, HMRC wants a signed authority letter dated within the last three months with every new application. Each proposed investment needs its own application, so a second round means a second request, and material changes to the plan between assurance and share issue need thinking about before the shares go out. HMRC’s current guidance sits at gov.uk.

SEIS, EIS and the order they come in

SEIS is for the first money into a young company. EIS is for the rounds after it, with far larger limits and a longer age window. You can use both, and many funded companies do, provided they come in that order.

Sequencing that protects the relief

Once EIS or venture capital trust money has been received, the SEIS door is shut for good. The SEIS shares have to be issued first, before any EIS or venture capital trust money is received. Founders running a rolling round, where one investor’s money lands a week early, have lost their seed investors the relief on a technicality that nobody noticed until the certificates were requested.

After the money lands

The three-year clock runs from each investment. Keep the trade qualifying, keep the company independent, leave the share rights alone, and do not buy the investors out. File the SEIS1 once you meet the four month trading test or the 70 per cent spending test, pass the SEIS3 certificates to your investors, and keep the spending records with the year end file rather than hunting for them two years later.

Working through the checklist

Run these in order. Most of the decisions that cost founders the relief are made before anybody opens a form.

  1. Date the trade and size the company — Find the date the current trade actually started, not the date of incorporation, and check it is inside three years. Then take the gross assets figure and the full time equivalent headcount as they will stand on the day the shares are issued, including any subsidiary. If either is close to £350,000 or 25 people, the timing of the round matters.
  2. Test the trade against the excluded list — Describe what the company sells in one sentence, then ask whether any part of it is lending, property, leasing or a financial service, and what share of the business that part represents. Twenty per cent is the line. Where a revenue model mixes software with hiring out hardware, split the figures now rather than arguing about it later.
  3. Get investors named and committed — HMRC wants real names and real amounts. Get the terms agreed in writing with each angel, even informally, before you apply. This is also the moment to check nobody is connected: more than 30 per cent of shares, votes or winding up assets, counting a spouse, parents and children, and no employees of the company.
  4. Fix the share terms before issue — New ordinary shares, fully paid in cash on the day, no preference on dividends or winding up, no buy back arrangement, and the names entered in the register of members. If a convertible loan note is sitting in the structure, deal with it before the round, because money converted from a loan is not a cash subscription.
  5. Apply for advance assurance — Send HMRC the plan, forecasts, articles, draft subscription documents, the investor list and details of any grants or state aid. One application per proposed investment. Where an agent files on your behalf, the signed authority letter has to be dated within the last three months. Then let your investors know the application is in.
  6. File the compliance statement after the raise — Once the company has traded for four months or spent 70 per cent of the money, file the SEIS1. HMRC issues the SEIS2, and you issue SEIS3 certificates to your investors so they can claim. Keep the spending evidence with your year-end records, and keep the company inside the rules for the next three years.

Where founders lose the relief

Almost every lost SEIS claim traces back to one of these four.

  • Issuing the shares first, asking later — A share issue is difficult to undo. If the shares went out with a preference attached, or were paid for by converting a loan, or were issued to someone holding more than 30 per cent, the relief on that issue is gone and no amount of paperwork afterwards brings it back. Check the terms before the share certificates are signed.
  • Using the money to clear a loan — Founders who have funded the company personally often plan to repay themselves out of the round. SEIS money spent repaying a director’s loan is not spent on a qualifying business activity, and the relief can be withdrawn. Repay founder loans out of trading income later, and keep the SEIS money visibly on the trade.
  • Applying with no investors named — HMRC will not look at a speculative application. If the form shows no identified investors and no amounts, it comes back unanswered and you have lost weeks of a raise that is probably already tight. Agree terms with at least one angel, in writing, before the application goes anywhere near HMRC.
  • Letting EIS money arrive too early — SEIS shares have to be issued first, before any EIS or venture capital trust money is received. In a rolling round where money lands as each investor commits, one early EIS transfer can close SEIS for everyone behind it. Keep the two tranches separate and document the dates.

When it pays to get help

For a clean case, filing advance assurance yourself is a reasonable afternoon’s work: one company, one straightforward trade, ordinary shares, two angels who are not related to you, no trading history to explain.

It is worth paying someone when the picture is less tidy:

  • the trade sits anywhere near leasing, lending, property or financial services, and the 20 per cent line needs working out
  • there is a convertible loan note, a prior trade, a dormant period or a group structure in the history
  • you are planning SEIS now and EIS within the year, so the order the two rounds come in matters
  • your angel wants to hear how the relief works for them personally before they commit

We handle SEIS and EIS advance assurance in house, including speaking to your investor directly. I obtained SEIS advance assurance for my own software company before raising, so I have filled this form in for myself as well as for clients. Fixed fee agreed in writing before any work starts, no hourly billing and no surprise invoices.

Frequently asked questions

Can we apply for advance assurance without naming our investors?

No. HMRC treats an application with no identified investors and no amounts as speculative and will not give a view on it. Get at least one angel to commit in writing to a figure first. The names and amounts go on the application, along with the plan, the forecasts and the articles.

Does advance assurance mean the relief is settled?

It means HMRC agrees the proposed investment looks as though it meets certain conditions, based on the information you gave. If the facts change before the shares are issued, or the company breaks the rules in the three years after, the relief can still be refused or withdrawn. Treat it as a strong indication rather than a final answer.

Our company has been trading for four years. Is SEIS gone?

For that trade, yes. The trade must not have been carried on for more than three years when the shares are issued, by your company or by whoever transferred it in. EIS has a longer window and much larger limits, so that is usually the route to look at instead. The two schemes have different age and size tests.

Can a co-founder or family member invest under SEIS?

Only if they are not connected. Connection means holding more than 30 per cent of the ordinary share capital, the voting rights, or the assets on a winding up, counting associates such as a spouse, parents and children. Employees cannot claim the relief, although directors can. Most co-founders fail the 30 per cent test.

Can we convert a director’s loan into SEIS shares?

No. SEIS shares have to be subscribed for wholly in cash and fully paid at the moment of issue, so converting an existing loan does not qualify. The same point applies to using the money raised to repay a founder loan, which is not a qualifying use of the funds and can cost the relief.

How much can the company raise under SEIS in total?

£250,000 across the company’s lifetime, including any de minimis state aid received in the three years up to and including the date of the investment. Grant funding can count towards that figure, so check what you have had before you set the round size. The amount also reduces the lifetime ceiling for later EIS and venture capital trust money.

Final thoughts

Run this SEIS eligibility checklist before the shares are issued, because that is the only point at which every condition is still fixable. Age of the trade, gross assets, headcount, the 20 per cent excluded activity line, cash paid for ordinary shares with no preference, investors who are not connected, and money spent on the trade within three years. Get those right and advance assurance is mostly a matter of presenting the facts clearly.

If your company is raising seed money and you want a straight answer on whether SEIS is open to you, and on whether R&D or patent box should be in the same conversation, answer a few quick questions and I will come back to you.

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