Eligibility and scheme conditions apply. Neither relief prevents a total capital loss.
Different routes to smaller companies
EIS and SEIS generally involve subscribing for qualifying shares directly or through a managed portfolio. A VCT is a listed investment company that invests in qualifying smaller businesses. Each route has different rules, costs and risks.
Stage and diversification
SEIS focuses on very young businesses. EIS supports qualifying growing companies. A VCT typically holds a portfolio. An EIS or SEIS portfolio may also diversify across companies, but the number and concentration of holdings vary.
Access to your money
EIS and SEIS shares can be very illiquid. Although VCT shares are listed, liquidity can still be limited and a sale price may be below net asset value. Minimum holding periods differ.
Compare the whole investment
Review the investment approach, charges, portfolio composition, deployment, tax conditions and likely exit process. Do not select solely by the headline tax relief rate.
Obtain independent advice
The appropriate route depends on your circumstances, objectives and ability to absorb loss. Check current HMRC guidance and speak with a qualified independent adviser.
Compare the structure of the investment
A direct shareholding, a managed collection of shareholdings and shares in a listed investment company create different relationships with the underlying businesses. Understand who chooses investments, how information reaches you and where charges apply. Compare the actual structure and terms, rather than treating all venture investments as interchangeable.
Consider access, costs and reporting
Ask how deployment works, how often you receive reporting and what practical options may exist if you want to sell. Review initial and ongoing charges and any performance-related fees in the relevant documents. A listing alone does not guarantee a sale at an acceptable price. Use the same set of questions when comparing different routes.
Go to the official source.
Use HMRC’s guidance for current eligibility requirements, reliefs and claim procedures.
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What is EIS?
Start here if the Enterprise Investment Scheme is new to you. Follow the journey from subscribing for shares to understanding why both business quality and tax conditions matter.
Inside this guide
- How a share investment works
- Company and investor conditions
- The documents to keep
SEIS explained
A closer look at the earliest stages of enterprise. Understand the different uncertainties of seed-stage businesses and the conditions behind the scheme’s headline relief.
Inside this guide
- What seed-stage funding supports
- Runway and future funding
- Conditional relief and holding periods