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Changes to the SEIS initiative, from April 2023

What is the Seed Enterprise Investment Scheme, or SEIS?

The Seed Enterprise Investment Scheme (SEIS) is a UK government initiative, which focuses on helping young companies grow and scale by attracting external investment.

It works by encouraging funding bodies to provide these businesses with capital by rewarding private investors with a significant tax deduction. This financial incentive acts as a safety net for providing ‘high-risk’ companies with funding.

The second branch of this scheme is called the Enterprise Investment Scheme (EIS), which instead focuses on SMEs that are further along their growth trajectory. The EIS is not undergoing change in April 2023, so we won’t delve into that scheme here. If you’d like to learn more about EIS funding, check out our R&D Tax Credit partner’s blog - SEIS and EIS: The schemes that attract investment for businesses.

Here, we’ll explain how the SEIS initiative currently works, limitations that are being addressed, and the specific changes being implemented from April 2023. In addition, we’ll run through how to take advantage of the new rules to start raising up to £250,000 immediately, as well as pitfalls to look out for.

How does SEIS currently work?

So, we’ve established that the Seed Enterprise Investment Scheme (SEIS) motivates funding bodies to invest in early-stage businesses by rewarding private investors with a substantial tax deduction.

But what do these deductions actually look like?

Currently (and until April 2023) SEIS works as follows:

  • A business applies for SEIS Advance Assurance, which is validation from HMRC that they qualify for SEIS funding, and that investors will receive subsequent tax breaks.

  • The funding body can invest up to £100,000 (per financial year) and in turn receive a 50% income tax break.

  • After three years, the investor then gains exemption from capital gains tax on any profits that arise from the sale of shares.

This means that SEIS-approved businesses can lose half of the capital risk that comes with investing in them whilst retaining the huge ROI potential.

It’s clear to see why this is a game-changer for potential investors, and why SEIS makes up a huge percentage of early-stage funds in the UK - in 2020-2021, 2,065 companies raised a total of £175 million of funds under the SEIS scheme.

Although companies can raise up to £12M under EIS once they’ve allocated their £150K SEIS fund, SEIS offers more generous benefits to investors – a 50% deduction of their investment amount against their income tax, rather than the 30% offered by EIS.

Think your business could benefit from SEIS (or EIS) funding?

If so, our partners at Jump Accounting can help you take the first step in securing SEIS/EIS Advance Assurance. As touched upon above, SEIS or EIS Advance Assurance secures ‘proof’ from HMRC that investors in your company will be rewarded with subsequent financial incentives. This guarantee of financial reward for investors will elevate your pitch and could even be the between success and failure!

Jump’s Chartered Accountants are experienced in completing the Advance Assurance application, checklist, and cover letter. Jump Accounting has built a brilliant relationship with many of our Vantage members. In fact, our Female Founder Growth Series alumni, Elena Rueda Carrasco, was able to obtain their SEIS Advance Assurance in just four days by using their service.

Why are things changing?

The SEIS scheme was introduced a decade ago, in 2012 – a time when raising £150K in a first round was enough to get most startups moving in the right direction. But times have certainly changed, and £150k doesn’t get you nearly as much as it did this time 10 years ago.

This issue aside, there exists the problem that the £150k limit led to first round business valuations in the UK that weren’t increasing in line with valuations in the US and elsewhere.

Studies have shown that companies dilute on average 10% - 15% in an initial funding round, which gave rise to a pattern of businesses raising £150K on pre-money valuations in the range of £850K to £1M.

Again, this sum was sufficient for most back in 2012, but the financial landscape has since moved on, and so have the demands of fast-growing companies.

What are the changes, and how will SEIS work from April 2023?

This month, in the September 2022 mini-budget, the UK government unveiled significant changes to the Seed Enterprise Investment Scheme. The reforms are as follows:

  • Companies can now raise £250,000 in SEIS – increasing from £150,000. This £100,000 increase in potential SEIS funds will enable businesses to extend their runway and address cashflow issues in several aspects of their business.

  • Companies can raise SEIS within the first 3 years of trading – increasing from the current 2 years. This enables businesses to plan, budget and strategize over a longer time period before meeting the deadline for SEIS investment, which in turn, should bring about more effective allocation of funds with a greater ROI.

  • Companies must have less than £350,000 in gross assets to be eligible to raise SEIS – increasing from the current £200,000.

  • The final change, time from the perspective of the investor, is that they’ll be limited to investing a maximum of £200,000 per year under SEIS, which is double the £100,000 maximum that’s currently in place.

Overall, the SEIS initiative is becoming more lucrative and more inclusive for businesses in the UK. In addition, investors will be able to see greater return as they’ll be able to double their yearly investment.

Over the past decade, the scheme has proved itself as a roaring success, accelerating the growth of countless early-stage businesses. This reform will only make the Seed Enterprise Investment Scheme more appealing, and help the UK maintain its status as a hub for entrepreneurship.

April 2023 is only six months away, so there’s not long to wait to reap these new benefits. However, if you just can’t wait that long - there is a possibility for businesses to utilise the reformed SEIS (and raise £250,000) prior to this date.

How is this possible?

Simply put, because the SEIS conditions are applied on the date that the shares are issued, you’re able to raise SEIS investment now (up to £250,000) and then issue shares in six months when the SEIS rules officially change.

This can be facilitated by an Advanced Subscription Agreement (ASA). An ASA is an equity tool whereby investors subscribe for shares in your next funding round in exchange for cash given now.

One condition of the ASA is that the investment must convert into shares in no more than six months from the date of the agreement. So, to raise the new SEIS maximum of £250,000, you can’t receive the funds or the ASA prior to the 6th of October 2022.

Whilst ASAs are entirely compatible with SEIS and EIS fundraising, we strongly advise that businesses use a legal professional to complete your Advanced Subscription Agreement, ensuring no important conditions are omitted.

Here at Vantage, we work alongside a fantastic legal partner who has been instrumental in delivering workshops in the Female Founder Growth Series and the MedTech Growth Series.

This award-winning law firm – Jamieson Law – specialises in helping businesses scale safely through fast-acting Business Law and Brand Protection services. Our members can access their legal services at an exclusive discounted rate. To take advantage of this offer, which includes the ASA service - reach out to our Head of Programmes at and request an introduction to Jamieson Law.

It’s widely regarded in the fundraising space that DIY templates for your ASA (or other legal documents) are no match for engaging an experienced solicitor – no matter how budget-friendly it appears. Insufficient ASA contracts could leave you picking agreements apart down the line, and potentially have investors withdraw from deals.

That covers everything you need to know regarding the changes being made to the Seed Enterprise Investment Scheme, from April 2023!

If the reforms mentioned here make SEIS funding more attractive to you, or if they’re due to make your currently ineligible business eligible, remember to mark the 6th of April 2023 in your diary!

Or, to avoid the rush of applications in April of next year, get your SEIS Advance Assurance underway today by reaching out to Sophie ( She’ll be more than happy to make the introduction!


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