What is the relationship between SEIS and EIS?

The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are both initiatives designed to encourage investment in small, high-risk companies by providing tax relief to investors. The correct answer indicates that SEIS is a complementary scheme to EIS, which is accurate because they target different stages of business development and offer distinct benefits to investors.

SEIS is aimed primarily at very early-stage companies, allowing investors to receive significant tax relief on smaller investments (up to £100,000 as of recent guidelines) in startups that meet specific criteria. On the other hand, EIS targets slightly larger companies that are more established but still considered high-risk, allowing for investments up to £1 million.

Both schemes provide tax incentives but are tailored to different segments of the market. Thus, SEIS acts as a stepping stone for businesses that may later qualify for EIS as they grow and develop. This relationship illustrates how both schemes work together to support the ecosystem of small business financing in the UK.