--- title: "Big SEIS changes for 2023, here’s how to raise £250K SEIS starting now" id: "32662" type: "post" slug: "use-seedfasts-to-take-advantage-of-new-seis-rules-starting-now" published_at: "2022-09-25T13:52:56+00:00" modified_at: "2023-04-06T13:00:00+00:00" url: "https://seedlegals.com/resources/use-seedfasts-to-take-advantage-of-new-seis-rules-starting-now/" markdown_url: "https://seedlegals.com/resources/use-seedfasts-to-take-advantage-of-new-seis-rules-starting-now.md" excerpt: "Great news for startups! We explain how to make the most of the new rules coming to SEIS from April 2023 - how to raise up to £250,000 right now, and the limitations to watch out for." taxonomy_category: - "SEIS EIS" --- 7 min read Expert reviewed This article has been fact-checked by a SeedLegals subject matter expert. [Meet our experts](https://seedlegals.com/authors-and-experts/) and learn more about our review process and quality assurance in our [editorial policy](https://seedlegals.com/editorial-policy/) . # Big SEIS changes for 2023, here’s how to raise £250K SEIS starting now Published: Sep 25, 2022 Updated: Apr 06, 2023 Contents [Quick history of SEIS/EIS – and why the limits need to increase](#quick-history-of-seiseis-and-why-the-limits-need-to-increase) [The big exciting SEIS changes](#the-big-exciting-seis-changes) [How to raise £250K in SEIS starting now](#how-to-raise-250k-in-seis-starting-now) [How to use SeedFASTs to raise £250,000 in SEIS starting today](#how-to-use-seedfasts-to-raise-250000-in-seis-starting-today) [If you don’t already have SEIS Advance Assurance…](#if-you-dont-already-have-seis-advance-assurance) [Already raised £150,000 in SEIS? Here’s how to raise more](#already-raised-150000-in-seis-heres-how-to-raise-more) [Already issued EIS shares?](#already-issued-eis-shares) [Already raised a mixture of SEIS and EIS in SeedFASTs?](#already-raised-a-mixture-of-seis-and-eis-in-seedfasts) [Watch out for the gross assets limit](#watch-out-for-the-gross-assets-limit) [Disclaimer](#disclaimer) [Talk to an expert](#talk-to-an-expert) [WriterAnthony RoseCo-Founder and CEO](https://seedlegals.com/resources/author/anthony/) [EditorSuzanne WorthingtonSenior Writer](https://seedlegals.com/resources/author/suzanne/) In this post, we explain the changes to the [Seed Enterprise Investment Scheme](https://seedlegals.com/resources/seis/) for 2023, how to take advantage of the new rules to start raising up to £250,000 right now, and the limitations and things to watch out for. **Update 6 April 2023:** This article has been superseded, [keep reading here](https://seedlegals.com/resources/you-can-now-raise-250k-seis-but-wait-till-july-to-do-the-seis-eis-compliance/) . **Important:** The changes haven't become law yet - this means they are currently only *proposed*. [Read the disclaimer below](#disclaimer) before you sign anything with investors. ### **Contents** - [Quick history of SEIS/EIS – and why the limits need to increase](#history) - [The big exciting SEIS changes](#changes) - [How to raise £250K in SEIS starting now](#how-to-raise) - [How to use SeedFASTs to raise £250,000 in SEIS starting today](#seedfast) - [If you don’t already have SEIS Advance Assurance…](#dont-have-advance-assurance) - [Already raised £150,000 in SEIS? Here’s how to raise more](#already-raised) - [Already issued EIS shares?](#already-issued-eis-shares) - [Already raised a mixture of SEIS and EIS in SeedFASTs?](#raised-mix-seis-eis) - [Watch out for the gross assets limit](#gross-assets) - [Disclaimer: What we know so far](#disclaimer) - [Talk to an expert](#talk-to-an-expert) ## **Quick history of SEIS/EIS – and why the limits need to increase** SEIS and EIS investment fuels the UK startup ecosystem. At SeedLegals we estimate that 80% of all early-stage investment (angel and seed funding rounds, companies raising up to £500,000) is SEIS or EIS investment, from angel investors and SEIS/EIS funds, with investors looking for those tax deductions on their investment, and no capital gains tax on sale of their shares later. Although companies can raise up to £12 million in EIS when they’ve exhausted their £150,000 SEIS allowance, the increased benefits of SEIS to investors – a 50% deduction of their investment amount against their income tax versus 30% for EIS – meant that many investors and SEIS VC funds would only make investments eligible for SEIS. And to some extent, that created a £150,000 glass ceiling on first investment round sizes. When the SEIS system was introduced back in 2012, raising £150,000 in a first round was just about perfect for most startups. But that was a decade ago. £150,000 ain’t what it used to be, companies really need to raise more than that now for their first round to have enough capital to build a team and get a product to market before needing to raise again. The other problem that the £150,000 SEIS limit created was first round company valuations in the UK that weren’t increasing in line with valuations in, particularly, the US. SeedLegals data shows that companies dilute on average 10% to 15% in a first funding round, which gave rise to a pattern of companies raising £150,000 on pre-money valuations in the range of £850,000 to £1 million or so… which again was fine back in 2012, but things have moved on since then. ## **The big exciting SEIS changes** In the September 2022 mini budget, the [UK government announced](https://seedlegals.com/resources/mini-budget-2022-key-takeaways-that-could-affect-your-business/) major improvements to the Seed Enterprise Investment Scheme. Despite some of the [U-turns](https://seedlegals.com/resources/u-turn-on-mini-budget/) after Kwarteng’s mini budget, these changes to SEIS stayed in the government’s plans and they are currently going through Parliament: - You’ll be able to raise **£250,000** in SEIS – previously £150,000 - You’ll be able to raise SEIS within the **first 3 years of trading** – previously 2 years - Your company must have **less than £350,000** in gross assets to qualify – previously £200,000 For investors, they were previously limited to investing a maximum of £100,000 per year in SEIS, and up to £1 million in EIS. That will increased to a personal investor limit of **£200,000** per year which should unlock more investor money (at least from those with more than £100,000 spare cash to invest). That’s exciting news! But there’s a problem: the changes were due to come into effect from 6 April 2023 – but they’re still going through Parliament. The changes haven’t yet been made – they’re still ***proposed* changes**. So how can you take advantage of this today? ## **How to raise £250K in SEIS starting now** When the changes become law – assuming nothing changes in how the charges are written – they will apply from 6 April 2023. And SEIS rules are applied *on the date the shares are issued.* So… what if you could raise investment now and take advantage of the new £250,000 limit… Is it possible to do that…? Yes, the good news is that even though the changes to SEIS will only become law later this year, if the changes are made exactly as they’re written, they’ll apply from 6 April 2023. And any shares you issue from now on will be after 6 April 2023 so the new SEIS rules will apply. Here’s a list of things you can do to take advantage of the new rules right now, and the limitations and things to watch out for: ## **How to use SeedFASTs to raise £250,000 in SEIS starting *today*** If you already have [Advanced Assurance](https://seedlegals.com/start/seis-eis/) from HMRC that investments into your company qualify for SEIS: 1. [Register or log in](https://app.seedlegals.com/login) to SeedLegals 2. Create a [SeedFAST](https://seedlegals.com/raise/raise-before-a-round/) for each investment 3. Set the longstop date for six months time We expect the SEIS changes to be approved by Parliament around July 2023. If you create a SeedFAST now, and set the longstop date for six months time – the maximum allowed to qualify for SEIS – then at the longstop date, the SEIS changes should have been become law and investments up to £250,000 will be eligible for SEIS because you’ll have issued the shares after 6 April 2023. You’ll do [SEIS compliance](https://seedlegals.com/raise/seis-eis-compliance/) after the longstop date and by then the changes to SEIS should have become law, so HMRC will apply the new rules to your case. ## If you don’t already have SEIS Advance Assurance… If you don’t already have confirmation from HMRC that investments into your company will be eligible for SEIS, then you can still go ahead to apply for Advance Assurance – but until the changes to SEIS become law (probably after July 2023), **HMRC will use the existing criteria**. This means to obtain your Advance Assurance status, your company must comply with [the existing rules](https://seedlegals.com/resources/seis/#seis-eligibility-criteria) : you must have been trading for less than two years, have gross assets of less than £200,000 and so on. When you have Advance Assurance, this shows that investments into your company qualifies for SEIS. So when the law changes to say that the limit is £250,000 rather than £150,000, then you’re all set to raise £250,000. (See section above: [How to use SeedFASTs to raise £250,000 in SEIS starting today](#how-to-raise) ) ## **Already raised £150,000 in SEIS? Here’s how to raise more** If you’ve already raised the current maximum of £150,000 in SEIS, you can raise up to £100,000 more as long as: 1. your company has been trading for less than 3 years at the date the shares are issued Assuming you issue the share on or after 6 April 2023 *and*that the SEIS changes become law as they are currently written, then the new legislation will apply to your fundraising. *and* 2. you haven’t issued EIS shares yet This applies now and after the changes become law: you can’t raise with SEIS if you’ve issued EIS shares. ## **Already issued EIS shares?** The SEIS rules are clear: ‘No SEIS after EIS’ – which means if your company has ever issued EIS shares, you can never raise SEIS after that. So, unfortunately the new rules won’t help you here. ## **Already raised a mixture of SEIS and EIS in SeedFASTs?** One of the many advantages of [raising with SeedFASTs](https://seedlegals.com/raise/raise-before-a-round/) is you can freely mix and match SEIS and EIS investments. For example, you could: - raise £20,000 SEIS from Alice - then raise £50,000 EIS from Bob - then raise £30,000 SEIS from Charles … all with SeedFASTs. It’s fine that Charles’ SEIS SeedFAST investment comes *after* Bob’s EIS investment because the ‘no SEIS after EIS’ rule applies to *when the shares are issued*, not when the funds were received, So when the SeedFASTs convert you’ll need to make sure that the EIS investments all convert into shares *at least one day after* all the SEIS investments convert into shares. If you do your SeedFAST conversions on SeedLegals, the platform automatically sorts all that for you. ##### SeedFAST agreement ### Raise before a round Use SeedFAST to take a one-off investment before a funding round. SEIS compatible, no company valuation required, your SeedFAST can be ready to sign in minutes. [Find out more](https://seedlegals.com/raise/raise-before-a-round/) ## **Watch out for the gross assets limit** If you plan to raise a mix of SEIS and EIS (or non-SEIS) money either in a funding round or by way of SeedFASTs, you need to be careful to avoid going over the £200,000 gross asset limit – which will change to £350,000 when the SEIS changes become law. **Gross assets** for SEIS purposes are defined as the total assets of the company *excluding the SEIS investments themselves.*There’s more detail on this in our article: [Check you meet the SEIS/EIS gross assets requirement](https://help.seedlegals.com/en/2142732-how-to-check-you-meet-the-seis-eis-gross-assets-requirement) This means that you can use SeedFASTs now to raise: - up to £250,000 in SEIS, and - up to £350,000 in EIS plus *whatever of that money you spent between now and when you issue the shares* and still be within the new £350,000 gross assets limit when the SeedFASTs convert. Here’s why it works: - Assuming all your SEIS investments convert to shares on the same day, then the £250,000 SEIS money doesn’t count towards the gross assets. This is because HMRC’s gross assets definition allows you to exclude from your gross assets all advance payments for shares that convert on the same day. - The £350,000 EIS investments will count towards your gross assets because those shares need to be issued *at least one day after* the SEIS shares. The above points assume that your company doesn’t have any other qualifying assets or cash in the bank – if you do, then of course you’ll need to factor in those other assets when you calculate your company’s gross assets. Remember: it’s the money in the bank at the time the shares are issued that counts. So if you raised £500,000 in EIS investment and spent £200,000 of that EIS money before those SeedFASTs convert, then your company’s gross assets (according to HMRC) won’t include that £200,000. That’s assuming you spent the money on things like paying salaries, rather than buying equipment or stock (or anything that would be an ‘asset’). ## **Disclaimer** **Update 6 April 2023:** These SEIS changes are in the Finance (No. 2) Bill which is currently going through Parliament. You can read more in the [policy paper](https://www.gov.uk/government/publications/venture-capital-schemes-expansion-of-the-seed-enterprise-investment-scheme-seis/increasing-the-limits-of-the-seed-enterprise-investment-scheme) and follow the [progress of the Bill](https://bills.parliament.uk/bills/3435) . Until Parliament approves the changes and HMRC confirms the exact details (for example, that the new rules will apply to shares issued on or after 6 April 2023 even if the funds were received before then) **all the above is not legal advice**. We expect the Finance (No.2) Bill to be given Royal Assent around July 2023. The changes to SEIS could be changed or cancelled before they become law – but we believe this is unlikely. You can talk to investors and make plans based on the above, but **there’s no guarantee**that the SEIS changes will be made, or that the changes will be made exactly as described in this post. We’ll update this post when the SEIS changes become law and HMRC updates their website. ## Talk to an expert Ready to [raise with SeedFAST](https://seedlegals.com/raise/raise-before-a-round/) to make the most of the new SEIS limits? Book a free call with one of our funding strategists – bring your questions to get answers fast. - Sources 1. [Gov.uk | Policy paper | Increasing the limits of the Seed Enterprise Investment Scheme](https://www.gov.uk/government/publications/venture-capital-schemes-expansion-of-the-seed-enterprise-investment-scheme-seis/increasing-the-limits-of-the-seed-enterprise-investment-scheme) | Accessed 13/03/23 2. [Parliament UK | Finance (No. 2) Bill](https://bills.parliament.uk/bills/3435) | Accessed 05/04/23 3. [Gov.uk | PDF | Autumn Statement 2022](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1118417/CCS1022065440-001_SECURE_HMT_Autumn_Statement_November_2022_Web_accessible__1_.pdf) | Accessed 17/11/22 (see page 35, 3.31) 4. **Growth Plan 2022** - [Gov.uk | Speech | The Growth Plan 2022](https://www.gov.uk/government/speeches/the-growth-plan-2022-speech) | Accessed 25/09/22 - [Gov.uk | Policy paper | The Growth Plan 2022](https://www.gov.uk/government/publications/the-growth-plan-2022-documents) | Accessed 25/09/22 #### Anthony Rose Serial entrepreneur and startup champion, Anthony is our CEO and Co-Founder. [Read more](https://seedlegals.com/resources/author/anthony/) [https://www.linkedin.com/in/anrose/](https://www.linkedin.com/in/anrose/) ## Related posts [4 min readMini-Budget 2022: Key takeaways that could affect your businessFind out how changes to tax and business support announced in the government's Growth Plan 2022 could help your company ... Benedict Conry](https://seedlegals.com/resources/mini-budget-2022-key-takeaways-that-could-affect-your-business/) [4 min readSEIS and EIS loss relief: What is it and how can your investors claim it?Startup not working out? Haven’t been able to raise investment? Here’s how to make sure the SEIS/EIS investors who’ve su... Suzanne Worthington](https://seedlegals.com/resources/eis-seis-loss-relief/) [6 min readSeedLegals introduces SEIS/EIS SAFE for US companies raising investment from UK investorsWe explain what US companies need to do to offer SEIS/EIS to investors - and how to use the SeedLegals SEIS/EIS compatib... 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