SEIS in April 2023: the gap before Royal Assent

Historical note, originally published 11 April 2023. The legislative uncertainty discussed here ended when Finance Act 2023 received Royal Assent. The expanded rules took effect from 6 April 2023 under the Act's commencement provisions. Reviewed 21 September 2026. For new applications use our current guide.

The practical problem in April 2023

The announced SEIS expansion was intended to apply from 6 April 2023, but the Finance Bill had not yet become law. Companies and investors were therefore preparing transactions during a gap between the intended effective date and enactment.

The proposed increases were £250,000 company funding, £200,000 annual investor subscriptions, a three-year new-trade age limit and £350,000 gross assets. Before enactment, advisers needed to distinguish the anticipated rules from the legislation then on the statute book.

Why the gap affected paperwork

Advance assurance is based on the law and facts relevant to the proposed investment. A letter relying on a proposed legislative change needed to be read with that condition in mind. The timing and wording of HMRC correspondence therefore mattered as much as the headline amount requested.

The original version of this article discussed practical approaches during that temporary period. Those approaches should not be used as instructions for an application today. In particular, there is no current need to add an EIS amount merely because the SEIS proposal exceeds the old £150,000 cap. Equally, an application is not necessarily refused simply because it refers to proposed legislation: the actual circumstances and any conditions in HMRC's response matter.

What has been resolved?

Finance Act 2023 s.15 enacted the increases. A current qualifying company can consider SEIS investment within the £250,000 limit, subject to the headroom rules and all other conditions. Gross assets are tested immediately before the relevant issue. ITA 2007 s.257DL and s.257DI.

There is no reason to delay a current compliance statement because of the former Royal Assent gap. The relevant questions are whether the shares have been issued and the statutory filing conditions have been met. SEIS1 is the company's compliance statement; SEIS3 is the investor's compliance certificate. See our SEIS1 guide.

A lesson that still matters: sequencing

A combined SEIS/EIS raise needs careful sequencing. Relevant EIS or VCT investment on or before the SEIS issue day can prevent SEIS qualification. It is not enough to issue SEIS shares a few minutes before EIS shares on the same day. See our share sequencing guide and s.257DK.

The broader lesson is to resolve timing and legal conditions before promising an investor a tax outcome. A proposal, an advance assurance letter and an investor's final entitlement to relief are different things.