Does SEIS Advance Assurance Qualify You for EIS?

Introduction

If you’re running a UK startup, you’ll eventually confront the alphabet soup of venture capital tax reliefs. Among them, the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are powerful tools. Both offer income tax reliefs to investors who buy shares in young companies, making it easier for founders to raise capital. Yet the schemes serve different stages of growth. The question that often surfaces is, “Does SEIS assurance qualify you for EIS?” This misconception is widespread. Founders sometimes believe that obtaining SEIS advance assurance from HMRC automatically covers EIS as well, or that the same letter will satisfy both schemes. The reality is more nuanced.

We’ll unpack how SEIS and EIS advance assurance work, why each requires its own assessment, and when to apply for EIS assurance separately. You’ll see the SEIS vs EIS advance assurance differences in terms of company age, gross assets, employee headcount and investment limits. 

We also address common misconceptions and offer practical examples showing the SEIS-to-EIS transition in real fundraising journeys. Because compliance matters, we’ll use HMRC terminology throughout and cite official guidance. Finally, we’ll highlight how a compliance platform like Undo Capital supports both SEIS and EIS applications without marketing hype, helping you to navigate these schemes efficiently.

Understanding SEIS and EIS Advance Assurance

Advance assurance is HMRC’s early, informal view on whether a planned share issue is likely to qualify for tax relief. It helps investors understand the risk level before they commit funds. It is not a guarantee. It is guidance based only on the documents HMRC reviewed at the time.

Even when advance assurance is granted, investors still need to submit the SEIS1 or EIS1 compliance forms after the shares are issued. Only then can tax relief be claimed.

This matters when comparing SEIS vs EIS advanced assurance, especially for founders who ask, “Does SEIS assurance qualify you for EIS?” or “Does advanced SEIS assurance mean EIS as well?” The short answer is no. Each scheme has its own rules, paperwork, and HMRC tests.

SEIS Assurance Explained

SEIS targets very early-stage companies. To use it, a company must:

• carry out a new qualifying trade
• be based in the UK
• have gross assets under £350,000 at the time of issue
• employ fewer than 25 FTE employees
• not have raised EIS or VCT funds before
• raise no more than £250,000 in total

Investors can claim 50% income tax relief on SEIS investments, up to £200,000 per tax year.

These conditions illustrate the SEIS and EIS eligibility difference clearly: SEIS is “SEIS first, then EIS,” not both at once.

EIS Advance Assurance Requirements

EIS applies to slightly more mature businesses. A company must:

• carry out a qualifying trade
• have a permanent UK establishment
• have gross assets under £15 million before the share issue
• employ up to 250 FTE employees
• raise its first EIS investment within seven years of its first commercial sale (ten for knowledge-intensive companies)

EIS allows companies to raise:

• up to £5 million per year, and
• £12 million in total

Investors can claim 30% income tax relief, up to £2 million (where the amount above £1 million goes into a knowledge-intensive company).

These rules form the core of EIS eligibility criteria, and they differ sharply from SEIS.

Why Do Separate HMRC Assurance Letters Matter?

Even though founders often ask, “Does SEIS qualify for EIS?” the schemes are not interchangeable. Their thresholds, limits, and conditions are different, so HMRC assurance letter differences matter.

Advance assurance for SEIS does not automatically apply to EIS.

• If you plan a SEIS round, you submit a SEIS pack.
• If you plan an EIS round, you submit an EIS pack.

For mixed investment rounds, or SEIS and EIS combined rounds, HMRC still evaluates each scheme separately. SEIS shares must be issued first to stay compliant with both schemes’ rules.

Does SEIS Advance Assurance Automatically Qualify you for EIS?

No. The core question “Does SEIS assurance qualify you for EIS?” reveals a common misconception. Although both SEIS and EIS are part of HMRC’s venture capital schemes, they test different criteria. SEIS is explicitly for the earliest stage of a company’s life. It limits gross assets to £350,000 and employees to 25. EIS, on the other hand, applies to larger businesses with assets up to £15 million and up to 250 employees. A company could meet SEIS requirements today and later exceed them; those later investments may still be eligible under EIS, but only if HMRC assesses the company against EIS rules.

Another reason advanced SEIS assurance means EIS as well is an incorrect assumption about investor relief. SEIS investors receive 50% income tax relief on up to £200,000. EIS investors receive 30% on up to £2 million. Because the schemes offer different benefits, HMRC treats them separately and issues distinct certificates (SEIS3 for SEIS, EIS3/EIS5 for EIS). A company must submit separate compliance statements for each issue of shares. Using a single SEIS advance assurance letter to raise EIS funds is not possible.

Why SEIS and EIS Require Separate HMRC Assessments?

HMRC assesses SEIS and EIS applications against different eligibility tests. The SEIS vs EIS advance assurance differences include:

These distinctions mean that a company could meet all SEIS criteria at incorporation but later exceed one of the thresholds (for example, by employing more than 25 people). In that case, it cannot continue raising under SEIS but may be eligible under EIS. HMRC must therefore evaluate an EIS application separately.

Differences in Investment Limits and Conditions

SEIS and EIS do not only differ in eligibility. Their investment limits and conditions also diverge. These gaps create the core SEIS and EIS eligibility difference that founders often overlook when asking, “Does SEIS assurance qualify you for EIS, or does SEIS qualify for EIS?”.

SEIS Limits and Conditions

SEIS supports the earliest stage of a company.
It is tightly capped and strictly controlled.

• Maximum SEIS fundraising: £250,000.
  
  
• Funds must be spent within three years on a qualifying trade or qualifying R&D.
• SEIS money cannot be used to buy shares in other companies (except qualifying subsidiaries).
• Investors receive 50% income tax relief and may claim capital gains reinvestment relief.
• These features sit at the heart of SEIS assurance, explaining and showing why SEIS is “SEIS first, then EIS,” not both at once.

EIS Limits and Conditions

EIS is designed for companies that have moved beyond the earliest stage.
The structure is wider and more flexible, but also more regulated.

• Maximum EIS fundraising: £5 million per year, up to £12 million lifetime.
• Companies must meet the risk-to-capital test, showing genuine growth and a real possibility of investor loss.
• Funds must support long-term development: revenue, customer base, and staff expansion.
• EIS shares must be full-risk ordinary shares with no preferential rights.
• Investors receive 30% income tax relief and may defer capital gains when reinvesting.

These rules form the core of the EIS eligibility criteria and highlight why EIS advance assurance requirements differ significantly from SEIS. They also explain why HMRC treats SEIS vs EIS advance assurance as two distinct reviews, even in mixed investment rounds or SEIS and EIS combined rounds.

Separate Documentation Requirements

Because the schemes have distinct rules, each requires bespoke documentation. SEIS investments require a specific subscription agreement reflecting the £250,000 cap and the prohibition on issuing shares after EIS or VCT funding. Companies must prepare an SEIS‑specific investor agreement, allocate shares accordingly and file a compliance statement (SEIS1) after shares are issued. They must keep cap tables showing that SEIS shares are separate from any other share class.

EIS investments, in contrast, require a separate investor agreement that reflects the higher limits and risk‑to‑capital requirements. A company must prepare a business plan showing how the funds will be used and provide financial forecasts to HMRC. It must also document any subsidiaries and confirm that the group meets the qualifying trade test. When raising both SEIS and EIS, companies should include separate share classes with clear terms for each scheme and must issue SEIS shares before EIS shares. Failing to keep documentation distinct could lead HMRC to withdraw relief.

When Must You Apply for EIS Advance Assurance Separately?

For most startups, the natural path is a SEIS-to-EIS transition. Founders raise a small SEIS round first, then move to a larger EIS round. This reflects both funding needs and the SEIS and EIS eligibility difference.

SEIS → EIS Fundraising Sequence

For most startups, the natural path is an SEIS-to-EIS transition. Founders raise a small SEIS round first, then move to a larger EIS round. 

A typical pattern looks like this:

• SEIS round first, often raised from angels, friends or early backers, SEIS cap.
• The company grows, hits the SEIS limit, and needs more capital to hire staff and build the product.
• The next raise requires EIS advance assurance, because SEIS vs EIS advance assurance rules are not interchangeable.

Founders often ask: “Does SEIS qualify for EIS?” or “Can we rely on our SEIS assurance for the next round?” The answer is no. HMRC treats each scheme separately. A new application is required.

Under EIS advance assurance requirements, HMRC reviews:

• the updated business plan,
• the risk-to-capital test, and
• the company’s qualifying trade position.

Only after receiving EIS advance assurance can a company issue EIS shares. This keeps the raise compliant and ensures investors can rely on the relief.

Mixed Rounds (SEIS + EIS at the Same Time)

Some startups structure a single funding round that contains both SEIS and EIS investments. This approach allows early investors to benefit from the higher SEIS tax relief while larger investors join under EIS. In such SEIS and EIS combined rounds, the company submits a single application pack to HMRC but must clearly separate the two tranches. HMRC will conduct two evaluations, one for SEIS and one for EIS, and issue two separate assurance letters. The company must ensure that SEIS shares are issued before EIS shares. 

This sequencing is not a trivial administrative detail; issuing EIS shares first would render the SEIS investment ineligible. When planning a mixed round, founders should allocate the initial £250,000 to SEIS investors and reserve subsequent investments for EIS. Investor agreements should reflect the different reliefs, and the cap table must show separate share classes.

When Do Company Changes Affect EIS Eligibility?

A company may obtain SEIS advance assurance early on but later pivot its business model, acquire a subsidiary or expand overseas. These changes can affect EIS eligibility. For example, if a company acquires a subsidiary that engages in an excluded activity such as property development or financial services, it may fail the qualifying trade test. If the company’s gross assets increase beyond £15 million after initial SEIS funding, it cannot raise further EIS funds. 

Similarly, if employee numbers grow beyond 250, EIS eligibility is lost. Even changes to share structure, such as introducing preference shares with redemption rights, can disqualify the company. Therefore, whenever there is a material change in structure or activities, founders must seek fresh EIS advance assurance rather than relying on an outdated SEIS letter.

How SEIS and EIS Work Together During Fundraising?

The order matters. A lot. For a compliant SEIS to EIS transition, a company must issue SEIS shares first. Only after that can it issue EIS shares.

Sequence of Share Issuance

HMRC guidance is strict: once you issue EIS shares, you cannot issue SEIS shares afterwards. This sequencing rule sits at the centre of the SEIS and EIS eligibility difference and applies in every round.

To stay compliant:

• Close and issue all SEIS shares first.
• Submit your SEIS1 compliance statement.
• Update the cap table, pass the board resolutions.
• Then start the EIS round and issue EIS shares.

If the order is wrong, HMRC can refuse both SEIS and EIS relief. This is why founders often ask, “Does SEIS assurance qualify you for EIS?”, and why the answer is always no.

Why Investors Expect EIS Assurance, Even if SEIS was Approved?

Investors treat SEIS and EIS differently. SEIS is small and early. EIS covers much larger cheques and stricter rules. That is why EIS investors expect a separate EIS advance assurance letter.

Even if a company already holds SEIS approval, investors still need EIS confirmation because:

• EIS has its own rules: company age, risk-to-capital test, and funding limits.
• Investors rely on the EIS investor relief conditions.
• SEIS approval does not confirm EIS eligibility.

Prospective EIS investors look for a clean SEIS vs an EIS advance assurance structure and two separate HMRC letters. SEIS approval is helpful, but it is not a substitute for EIS assurance.

Common Founder Misconceptions

The confusion about whether SEIS qualifies for EIS stems from several misconceptions:

1. “SEIS approval means EIS should be automatic.” In reality, each scheme has separate thresholds. HMRC statistics show that in the tax year 2024‑25, 3,090 EIS advance assurance applications were received, and 76% were approved. The high number of applications demonstrates that companies cannot skip this step.
2. “One HMRC letter covers both.” Advance assurance letters explicitly state whether they cover SEIS or EIS. HMRC issues SEIS3 certificates for SEIS and EIS3/EIS5 certificates for EIS. Investors cannot rely on a single letter to claim different reliefs.
3. “SEIS eligibility implies EIS eligibility.” A company may be small enough for SEIS but might conduct an excluded trade or exceed EIS age limits. For example, a business involved in property development or banking is excluded from both schemes, while a high‑growth technology company might outgrow the EIS asset threshold before raising EIS funds.

Companies Applying for EIS after Pivoting or Changing Structure

Suppose a software company initially qualified for SEIS. After a year, it pivots to become a lending platform. Lending is an excluded activity under HMRC rules. Even if the company remains small, it would now fail the qualifying trade test. If it still wants to raise capital, it cannot rely on SEIS or EIS. In another scenario, a company might add a subsidiary abroad that engages in property development. Because property development is an excluded activity, HMRC may view this as a material change and require a new EIS advance assurance application with full disclosure. 

Similarly, issuing preference shares with redemption rights might violate the requirement that EIS shares be full‑risk ordinary shares. Founders should treat any major structural change as a trigger to revisit their advance assurance status.

How does Undo Capital help with SEIS and EIS Advance Assurance?

Obtaining and maintaining SEIS and EIS compliance can be administratively burdensome. Undo Capital provides an automated platform that streamlines the process. According to their product overview, the platform offers S(EIS) Advance Assurance tools that use smart forms, document templates and AI‑powered validation to prepare HMRC applications. It supports funding round setup by structuring valuation, share price and investment targets and generating the required legal documents. 

Undo Capital also handles share issues & documentation by generating SH01 filings, board minutes and certificates in one click. The platform automates SEIS and EIS compliance statements, ensures investors receive their relief certificates and manages cap tables with real‑time updates. Investor compliance checks validate each investor’s eligibility for SEIS/EIS and track investment caps and company age rules.

These features address the pain points described earlier. When a company transitions from SEIS to EIS, Undo Capital updates the cap table to reflect different share classes, generates separate investor agreements and ensures that SEIS shares are issued before EIS shares. Its compliance automation reduces the risk of HMRC queries and helps founders focus on their business. For founders planning a funding round, using a platform like Undo Capital can minimise the administrative burden and improve investor confidence.

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