SEIS vs EIS Schemes

Just because you’re outside the EIS timeframe of 7 to 10 years, that doesn’t mean that you are ineligible to apply. HMRC have provided the exceptions below if your company falls outside the EIS age limit. 

Condition A: Follow-on funding

Where your company received its first SEIS/EIS investment before the end of the initial investment period, Condition A allows for investment as a follow-on funding. To qualify under this condition, the company needs to prove that the funding will be used for the same business activity as the first investment and satisfy that the additional follow-on funding was foreseen at the time of the initial investment. 

Condition B: Investment to enter a new product or geographic market

Condition B applies to companies that have never had received SEIS/EIS investment in the past. As the name suggests, the funding must be used to enter a new product or geographic market. The aim is to help companies enter a new growth phase, and so the company must satisfy that the amount of relevant investment must be at least 50% of the company’s average annual turnover, averaged over the last five years. 

You can apply for both schemes at the same time despite being a little more complicated and time-consuming. If you’re seeking investment using both the SEIS and EIS, you need to issue the shares on different days, by raising the initial investment via SEIS first before moving onto EIS provided all the conditions are met. You can’t raise EIS for the first round and use SEIS for the second round. For example, once your company exceeds the £250,000 SEIS limit, you can raise additional funds of up to £5m or more via EIS. 

We understand that it’s really challenging for clients to grasp the rules. If you require further assistance, our team can help.