EIS vs SEIS: which is right for you?

They are the same idea at two different stages. SEIS is for the very earliest companies and gives more generous relief because the risk is higher. EIS is for companies that are further along and lets you invest far more.

Most investors who use these schemes use both. A company will often raise its first £250,000 under SEIS and everything after that under EIS, and a single round can be split between the two.

SEIS gives income tax relief at 50% on up to £200,000 a year. EIS gives 30% on up to £1 million a year, or up to £2 million where the amount above £1 million goes into knowledge-intensive companies.

SEIS companies must be under three years old with gross assets under £350,000. EIS companies can be considerably larger and older, and the company can raise up to £5 million a year and £12 million over its lifetime, with higher limits for knowledge-intensive companies.

Both give capital gains tax exemption on growth after three years and both offer loss relief. SEIS offers reinvestment relief on half a matched gain; EIS offers unlimited deferral of a gain rather than exemption of it.

If your priority is the largest upfront reduction in an income tax bill relative to the amount invested, SEIS does more per pound. If you are deploying a larger sum, EIS is the only one of the two with the headroom to absorb it.

Neither choice should be made on tax alone. The tax treatment is the same whether the company succeeds or fails; the company is what determines your outcome.