They read that the company has to be under three years old. They open Companies House. They see an incorporation date from four years ago. They close the tab.
The rule does not say incorporation. It says the company must not have been carrying on its new qualifying trade for more than three years when the shares are issued.
Those are different dates. Sometimes by years.
Being formed is not trading
The clock starts when you begin carrying on the trade. Not when the company was registered. Not when you opened the bank account. Not when you started working on the idea at weekends.
None of this starts it:
- Building something nobody can buy yet
- Research and development, however serious
- Testing, piloting, running a free closed beta
- Raising money, hiring, taking advice, setting up systems
The trade begins when you start carrying it on commercially. In most cases that is your first paying customer.
Which is why this rule lands so unevenly. A consultancy that invoiced in month one burned through its three years by month thirty seven. A hardware company incorporated in 2022 that shipped its first unit last spring has barely started the clock.
Four ways the gap opens up
You could not sell yet
Hardware, life sciences, climate, regulated fintech. Anything needing to be finished, certified or approved before anyone can pay you. Two or three years before first revenue is normal here.
You incorporated early
To hold the name, sign a founders' agreement, open an account, take a grant. Then the business properly started a year later.
The company sat dormant
Formed for one thing, parked, used later for the real business.
Grant funding paid for the build
Innovate UK and similar typically fund work that is squarely pre-trading.
Three founders, three answers
Probably still eligible
The trade is barely a year old. SEIS is likely live, on a company that is over four years old.
SEIS has gone, EIS has not
Three years ran out in March 2026. EIS runs for seven years from first commercial sale.
Almost certainly no
Here is why.
The company must not have carried on any other trade first
Pivoting does not reset anything. If you traded, even briefly, even at small scale, and then moved to something else, SEIS is generally gone for the new trade.
This catches a particular and painful case: founders who consulted to fund their own product build. They spent their SEIS entitlement on a trade they abandoned, and never claimed a penny of relief for it.
Three more things that will catch you
A trade you bought carries its history
Where the trade was previously carried on by a sole trader, a partnership or another company, HMRC looks at when that trade started. Incorporating an existing business does not buy fresh time.
The other tests apply on the same day
Gross assets under £350,000 immediately before the share issue. Fewer than 25 full time equivalent employees. Companies that spent three years building things have often accumulated more on the balance sheet than they realise, and the asset test quietly kills cases the trading test would have passed.
Your grant may have eaten the allowance
SEIS is de minimis state aid. So are a lot of grants. Grant funded companies are exactly the ones most likely to still be inside the trading window, and exactly the ones most likely to have less than £250,000 of headroom left.
So what do you do
Find the date your trade actually began, and be able to prove it. First invoice, first contract, the day the product went on sale.
If that date is inside three years, the question is open no matter what Companies House says.
If it is outside, you have not lost everything. EIS runs seven years from first commercial sale, and the limits went up sharply in April 2026 to £10 million a year and £24 million over the company's lifetime. Your investors get 30 per cent instead of 50 per cent. That is a downgrade, not a disaster.
One thing to watch if both are available. SEIS goes first, always. A company cannot take SEIS money once EIS shares are issued, and same day issues fall entirely to EIS. Where your trading date is marginal, that sequencing decision is urgent rather than administrative.
Worth a call if any of these sound like you
- The company is over three years old but only started selling recently
- You spent a long stretch in development before any revenue
- You incorporated well before the business really began
- Someone told you SEIS was gone without asking when you started trading
Establishing which side of the line you are on takes one conversation. Having it before shares are issued is a very different conversation from having it afterwards.
Book a call →30 minutes, no charge, no pitch
This article sets out the general position and is not advice on any particular set of facts. Thresholds and rates are those applying at the date of publication.