EIS & SEIS Extension – A Boost for Startups and Investors Until 2035

In a boost to the UK’s entrepreneurial ecosystem, the government has extended the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) until 2035. This is not just a policy update; it’s an invitation for startups and investors to think bigger, dream bolder, and take more calculated risks.

The Enterprise Investment Scheme (EIS) was introduced by the UK government in 1994 to encourage investment in small, high-risk businesses by offering tax incentives to investors. In 2012, the Seed Enterprise Investment Scheme (SEIS) was introduced to further stimulate investment in early-stage startups by providing even greater tax relief. Both schemes were created to support innovation and economic growth by reducing financial risks for investors, making it easier for startups to secure crucial funding during their formative years.

Here’s why this matters:

1. Why This Extension is Crucial: The Investor's Perspective

Investing in early-stage companies is inherently risky. The vast majority of startups face challenges, and investors must weigh risks against potential returns. This is where EIS and SEIS come in. These schemes offer investors tax relief—30% under EIS and 50% under SEIS—on investments made in qualifying companies.

But what does this actually mean? For an investor, this dramatically reduces risk. It’s not just about tax breaks; it’s about fostering confidence in funding new ideas and innovations. By cushioning potential losses with loss relief and CGT exemptions, investors are incentivized to look at early-stage companies as viable, long-term growth opportunities.

Invest early, bet on the right horses, and be patient. The extension of these schemes is a clear message from the government: We support you in taking bold risks that may define the future.

2. Fuel for Founders: Access to Lifeblood Capital

For startup founders, the extension of EIS and SEIS is like oxygen in the fire of innovation. Securing investment is one of the biggest hurdles for any founder, but these schemes make your company more attractive to investors.

Think of it this way: an investor looks at your startup, they see potential but also risk. EIS and SEIS tip the scale in your favour, mitigating that risk for the investor. With the extension until 2035, founders can breathe easier knowing that there is a more stable, long-term framework for securing investments.

Innovation distinguishes between a leader and a follower. This extension gives you the resources to lead—by securing the capital you need to bring your innovation to the world. You have more time and more support to grow.

3. Globally: A Model for Other Nations

The UK has been at the forefront of fostering a vibrant entrepreneurial ecosystem, and the extension of these schemes only reinforces this. Other countries looking to boost their startup ecosystems can learn from the success of EIS and SEIS. By reducing risk for investors, the UK has shown that a proactive government approach can stimulate a culture of innovation and long-term business growth.

If other nations were to replicate these schemes, they could unleash entrepreneurial potential, bring in more foreign investments, and empower startups to think globally from day one.

4. EIS & SEIS Explained: A Win-Win for Investors and Founders

Both the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are designed to make early-stage investments more appealing to investors by offering substantial tax benefits.

For Investors:

• Income Tax Relief: EIS allows investors to claim 30% tax relief, while SEIS provides 50% tax relief on qualifying investments. This immediate tax reduction significantly lowers upfront risk.
• Capital Gains Tax (CGT) Exemption: Investors benefit from CGT exemption if shares are held for at least three years. This encourages long-term investment, rewarding those who take the risk of backing startups through to maturity.
• Loss Relief: If an investment fails, loss relief allows investors to offset the loss against other income, minimizing financial damage.

For Founders:

• More Attractive to Investors: With the schemes offering such significant tax incentives, startups become inherently more attractive to potential investors. This makes it easier for founders to raise critical early-stage capital.
• Extended Time Horizon: The extension until 2035 means founders can plan with confidence, knowing these benefits will remain available in the long term. This fosters a stable environment for entrepreneurs to innovate, grow, and scale without immediate financial pressures.

Ultimately, the schemes act as a financial cushion for both parties, creating a mutually beneficial ecosystem where risk is mitigated, and innovation is encouraged.

5. The Bigger Picture: Building the Future Together

This extension isn’t just a piece of legislation; it’s a message. A message to founders that innovation is rewarded, and a message to investors that bold bets are supported.

Play the long game, invest in people, and build something that changes the world. With EIS and SEIS in place for the next decade, the UK is empowering the next wave of dreamers and doers to make their mark.

Read more about the extension on the UK Business Angels Association (UKBAA) website here.

At Leading Lines, we are dedicated to supporting startups and ecosystem enablers with expert guidance, resources, and tailored solutions to help them thrive in a rapidly evolving business landscape. From strategic consulting to innovation enablement, we empower startups at every stage of growth. Whether you're a founder looking to scale or an investor seeking new opportunities, we are here to guide your journey. Join us in shaping the future of entrepreneurship.

Visit Leading Lines or reach us at [email protected] and let's work together.

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