For investors in UK companies, the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme are often the deciding factor. The reliefs are generous: 50% income tax relief on SEIS investments and 30% on EIS, alongside capital gains and loss reliefs for qualifying shares held for at least three years.
The catch is that the investor does not know for certain the relief will be available until after they have invested. Advance assurance is how companies narrow that uncertainty before the money goes in. The schemes are UK-specific, but they matter to overseas founders too: any company raising from UK-based investors, including many internationally headquartered businesses with a UK company, will be asked about them.
What advance assurance is
Advance assurance is an opinion from HMRC, given before the shares are issued, that the company and the proposed investment appear to meet the scheme conditions based on the information supplied.
It is voluntary. A company can raise under SEIS or EIS without it and apply for relief afterwards. In practice, many experienced investors and most funds will not invest without it, because it gives them confidence that the relief they are counting on is likely to be available.
It is not a guarantee. The assurance is based on what the company tells HMRC, and relief can still be refused if the facts change or the conditions are not met when the shares are actually issued.
What HMRC looks at
The application tests the company against the scheme rules. At a high level, HMRC will want to see that:
- The company carries on, or is preparing to carry on, a qualifying trade. Some activities, such as dealing in land, financial activities and certain asset-backed trades, are excluded.
- The company meets the size and age limits. For SEIS these include fewer than 25 employees, gross assets of no more than £350,000 and a trade that started less than three years ago. EIS limits are higher, and were increased significantly from April 2026. We cover the detail in SEIS and EIS: the differences that matter.
- The money will be used for a qualifying business activity within the required period.
- The raise will stay within the company’s annual and lifetime limits.
- The investment has genuine risk to capital and a real intention to grow the business, rather than being structured mainly to secure tax relief.
What to include in an application
Applications are made online to HMRC. Strong applications typically include:
- A clear business plan and financial forecasts showing how the business will grow and how the money will be used.
- The latest accounts, or management accounts if the company is new.
- The company’s articles of association and any shareholders’ agreement.
- Drafts of the investment documents, such as the subscription agreement and any side letters.
- Details of the share rights being offered, to confirm they are ordinary shares with no preferential rights that would breach the rules.
- Details of prospective investors, where HMRC asks for them.
Common mistakes
- Share rights that do not qualify. Preferences on dividends or on return of capital can disqualify shares. This is one of the most frequent problems, and it is easily avoided with properly drafted articles.
- Using debt first. Convertible loan notes generally do not qualify. See convertible loan notes explained.
- Issuing shares before assurance or before the paperwork is right. Once shares are issued, the terms are fixed.
- Vague use of funds. HMRC wants to see growth-related spending, not a general cash buffer.
- Pre-arranged exits. Arrangements that guarantee investors a way out undermine the risk-to-capital condition.
After the raise
Advance assurance is only the first step. Once the shares are issued and the qualifying conditions are met, the company submits a compliance statement to HMRC. If HMRC agrees, it authorises the company to issue compliance certificates to investors, who use them to claim relief. Keeping accurate records from day one makes this stage straightforward.
Working with SeedLegals
For the application itself and the compliance forms after the raise, we work with our partner SeedLegals. Their platform prepares and tracks the HMRC paperwork, so founders are not assembling it by hand, while we focus on structuring the round and the investor process. Talk to us about whether your company is likely to qualify.
Disclosure: BDM Wealth Management works with SeedLegals as its compliance partner. We do not receive referral fees from SeedLegals.
The short version
Advance assurance is voluntary but, in practice, expected. It tells investors that HMRC is likely to agree the investment qualifies, which removes one of the biggest questions from every conversation. Apply early, with a clear plan and properly drafted share rights, and the raise gets simpler.
Scheme rules are detailed and change from time to time. Take specialist tax advice before applying or issuing shares.
Mark Johnson is a Director of BDM Wealth Management, which introduces capital raising opportunities across bonds, loan notes, IPOs and SEIS/EIS. To discuss a raise, get in touch.
BDM Wealth Management is an introduction business and is not regulated. This article is general information, not financial, tax or legal advice, and does not constitute an offer or invitation to invest. Capital is at risk and you may get back less than you invest. Tax treatment depends on individual circumstances and may change. For high-net-worth and sophisticated investors only. Take independent professional advice before making any investment decision.