Log in
FundingUpdated 2026-02-12

What trades qualify for EIS?

Quick Answer

Most trading activities qualify for EIS, but certain trades are specifically excluded including property development, financial services, legal and accountancy services, hotels and guest houses, farming, coal and steel production, and energy generation receiving subsidies.

Let Finn handle this for you

AccountsOS does your books for you. Ask Finn about your own business, no signup needed.

Detailed Explanation

Qualifying trades for EIS and SEIS

The EIS and SEIS qualifying trade rules work on an exclusion basis. Rather than listing what qualifies, the legislation lists what does not qualify. If your trade is not on the excluded list, it qualifies.

Excluded trades

The following trades are excluded from EIS and SEIS relief:

  • **Property development** - buying, selling, or renting land or buildings (but construction and property services may qualify)
  • **Financial services** - banking, insurance, money lending, debt factoring, hire purchase
  • **Legal and accountancy services** - solicitors, barristers, accountants
  • **Dealing in land, commodities, futures, shares, or securities**
  • **Hotels, guest houses, and nursing homes** - providing accommodation (but related services businesses may qualify)
  • **Farming and market gardening** - agricultural activities
  • **Forestry and timber production**
  • **Coal and steel production**
  • **Shipbuilding**
  • **Energy generation** - where the company receives subsidies such as Feed-in Tariffs, Renewable Obligation Certificates, or Contracts for Difference
  • **Leasing activities** - including hiring assets to others
  • **Receiving royalties or licence fees** - as the main activity

What does qualify?

Common qualifying trades include software development, SaaS businesses, technology companies, manufacturing, retail, food and drink production (not farming), marketing agencies, design agencies, health tech, ed tech, and most service businesses not on the excluded list.

Mixed trades

If your company carries on both qualifying and non-qualifying activities, it can still qualify provided the non-qualifying activities are not a substantial part of the trade. HMRC generally interprets 'substantial' as 20% or more of the overall activity. So if less than 20% of your revenue or activities fall into an excluded category, you should still qualify.

Key points

  • The trade must be carried on commercially with a view to profit
  • The company must have a permanent establishment in the UK
  • The trade must not consist substantially of excluded activities
  • Preparatory activities before trading starts can count, but the company must begin trading within 2 years of the share issue

Source: HMRC VCM30020 - Qualifying Trades

Real-World Examples

Software Development Company

A software company developing bespoke CRM software for businesses would likely qualify for EIS, as software development is generally a qualifying trade. They can therefore attract investment using the EIS scheme, allowing investors to claim tax relief on their investments.

Restaurant Chain Expansion

While running a restaurant is typically considered a trade, raising EIS funding to expand a restaurant chain to multiple locations might be problematic. HMRC often scrutinizes businesses where the primary activity is hospitality, potentially deeming it outside the spirit of supporting genuinely innovative or high-growth companies.

Energy Efficiency Consultancy

A consultancy providing advice and services related to improving energy efficiency in commercial buildings *could* qualify for EIS. While energy generation receiving subsidies is excluded, pure consultancy services relating to energy saving, rather than production, have a higher chance of qualifying.

Common Mistakes to Avoid

  • Assuming that any company involved in property automatically disqualifies for EIS, when only actual property development is excluded.
  • Failing to obtain advance assurance from HMRC before raising EIS funds, which increases the risk of disqualification later.
  • Overlooking the 'wholly and mainly' trading requirement, where non-qualifying activities are a significant part of the business.
  • Misinterpreting 'financial services' to include any business that handles money, when it specifically refers to banking, insurance, and similar regulated activities.

What happens if my company starts an excluded trade *after* receiving EIS investment?

If your company begins an excluded trade within three years of the EIS investment, the investors' tax reliefs may be withdrawn. It's crucial to maintain a qualifying trade for the required period to avoid this.

Does selling online courses qualify for EIS?

Selling online courses *can* qualify, especially if the content is original, innovative, and creates intellectual property. However, simply reselling existing courses might be viewed as a distribution activity, which could be less likely to qualify.

My company develops both software and hardware. Does that affect EIS eligibility?

Developing both software and hardware *can* still qualify for EIS as long as neither activity falls into an excluded trade category. Be prepared to demonstrate that both activities are core to the business and contribute to its growth.

Can a business that subcontracts all its work qualify for EIS?

While subcontracting doesn't automatically disqualify a business, HMRC will scrutinise whether the company is genuinely trading or simply acting as a vehicle for others. Having demonstrable management expertise and taking active control of the business are crucial.

Practical Tips

  • Before seeking EIS investment, carefully review HMRC's guidance on excluded activities and honestly assess whether your business might fall into a gray area.
  • Prepare a detailed business plan clearly outlining your business model, target market, and how you will use the EIS investment to grow the company, focusing on the aspects that make it innovative and high-growth.
  • Obtain professional advice from a tax advisor experienced in EIS to ensure your business structure and activities meet the eligibility criteria before approaching investors.
  • Maintain detailed records of your business activities and financial transactions to demonstrate compliance with EIS rules during any future HMRC compliance checks.

Related Questions

How do I apply for SEIS/EIS advance assurance?

You apply to HMRC's Small Company Enterprise Centre using the online advance assurance form, providing details of your company, trade, and proposed share issue. HMRC typically responds within 4-6 weeks.

What is the difference between SEIS and EIS?

SEIS offers 50% income tax relief on investments up to £200,000 in very early-stage companies (under 3 years, under £250k raised), while EIS offers 30% relief on up to £1 million in slightly larger companies (under 7 years, up to £10 million raised per year).

How much can I raise under EIS?

A company can raise up to £10 million per year under EIS, with a lifetime maximum of £24 million from all venture capital schemes combined (for shares issued on or after 6 April 2026). Knowledge-intensive companies can raise up to £20 million per year with a £40 million lifetime cap.

Browse all questions →

Applying for SEIS or EIS advance assurance?

Finn builds the pack for HMRC's form from your company's records. You check it and submit it.

Get Started Free

Free for 14 days - No credit card required