Which trades are excluded from SEIS and EIS?

Key facts

• The excluded list includes dealing in land or shares, banking and moneylending, property development, farming and woodlands, hotels, nursing homes, coal and steel, shipbuilding and energy generation.
• Legal and accountancy services are excluded trades — but building software for law or accountancy firms is a different trade.
• Receiving royalties or licence fees is excluded unless the IP was created by the company itself.
• A trade only fails if excluded activities are a "substantial" part of it — HMRC treats around 20% as substantial.
• Excluded activities becoming substantial within 3 years of the share issue can trigger withdrawal of investors' relief.

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Why do SEIS and EIS exclude some trades?

Because both schemes exist to push investment into genuinely high-risk, growth-focused companies — not into ventures whose value sits in land, assets or predictable professional income. The excluded list strips out the trades where investors' capital was never really at risk.

The same policy drives the risk-to-capital condition, introduced by the Finance Act 2018. The company must have objectives to grow and develop long-term, and the investment must carry a significant risk that investors lose more capital than they gain in return.

The prize is why the boundary matters: SEIS gives investors 50% income tax relief, EIS 30% — so HMRC polices the edges carefully.

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Which trades are on the excluded list?

The same excluded-activities list applies to both SEIS and EIS. It includes dealing in land or shares, banking, insurance and moneylending, legal and accountancy services, property development, farming and woodlands, hotels, nursing homes, coal and steel, shipbuilding, energy generation, and receiving royalties or licence fees — unless they come from IP the company created itself.

That is a summary, not the statute — the full list in HMRC's guidance is longer and more detailed. What matters is the trade your company actually carries on, not the sector it sells into.

The right-hand column is a guide, not a guarantee — near the boundary, the analysis turns on what the company really does for its money.

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What does "substantial" mean in practice?

You do not fail for a trivial excluded sideline. A trade is disqualified only where excluded activities are a substantial part of it, and HMRC treats around 20% as substantial — below that, a mixed business can still qualify.

It is not a mechanical formula you can engineer to 19.9% — treat 20% as a danger zone, not a design target. If an excluded activity matters to your revenue, the cleaner answer is usually to separate it out.

The test also keeps running. Excluded activities becoming substantial within three years of the share issue is one of HMRC's status-loss triggers, so a sideline that grows can cost your investors relief they have already claimed.

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Can software and platform startups fall foul of the list?

Occasionally, yes — most often through the royalties and licence-fee exclusion. Income from exploiting intellectual property is excluded unless the IP was created by the company itself, which is why licensing-in someone else's technology and living off the margin is dangerous territory.

Fintech needs similar care. Building software for banks or brokers is fine; lending your own money is moneylending — an excluded trade, however modern the app wrapped around it.

If your model sits near an edge — client money, energy-adjacent hardware, anything property-flavoured — describe the actual trade precisely and take advice before promising investors relief.

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How do I check my trade before raising?

Apply for advance assurance: HMRC's non-statutory pre-clearance that a proposed share issue should qualify. It is not mandatory, but most angels will not invest without it, and applications now need details of your expected investors.

Excluded-trade doubts surface there early, on paper, before anyone has wired money. If HMRC pushes back you can restructure — or stop marketing SEIS to investors before it becomes an expensive broken promise.

Responses commonly take 4–8 weeks as of mid-2026, sometimes longer in busy periods, so build the wait into your fundraising timeline.

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Worked example

Callum and Jess run StayFlow Ltd, which sells booking and housekeeping software to independent hotels — and also operates its own nine-room hotel in Margate. Last year the software brought in £80,000 and the hotel £40,000. That is a third of turnover from an excluded activity, well past the roughly 20% HMRC treats as substantial, so the whole company would fail SEIS.

Before raising their planned £150,000 SEIS round, they sell the hotel operation to a local operator. Their advance assurance application describes the software trade and discloses the disposal, and HMRC clears the proposed round. At 33% excluded activity the raise was dead; at zero it sails through.

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Where founders go wrong

• Confusing the sector you serve with the trade you run

  — selling software to hotels or property developers is not operating hotels or developing property.

• Ignoring a "small" excluded sideline

  — at roughly 20% of the trade it stops being small and disqualifies the whole company.

• Living off licensed-in IP

  — royalties and licence fees only escape the exclusion where the company created the IP itself.

• Treating qualification as a one-off test

  — excluded activities becoming substantial within three years of the issue can trigger withdrawal of relief already claimed.

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Related questions

Is software development an excluded trade for SEIS or EIS?

No — software development is not on the excluded list, and most SaaS businesses qualify. The trap is the royalties and licence-fee exclusion: income from exploiting IP only escapes it where the company created that IP itself, so licensing-in technology and reselling access needs careful structuring.

How much excluded activity is too much?

A company fails the trading requirement only if excluded activities form a substantial part of its trade, and HMRC treats around 20% as substantial. The safe approach is to keep any excluded sideline well below that level, or move it into a separate company entirely.

Can a proptech or fintech startup qualify for SEIS?

Often, yes. Building and selling software to property or finance businesses is not property development, banking or moneylending — the test looks at what your company actually does. But a fintech that lends its own money is likely to be an excluded moneylending trade, however modern the product. [More: Is my startup eligible for SEIS?]

What happens if my trade becomes excluded after the investment?

If excluded activities become a substantial part of the business within three years of the share issue, HMRC can withdraw your investors' relief. It is one of the standard status-loss triggers, alongside ceasing the qualifying trade, being acquired, repaying share capital and investors receiving value. [More: Can my company lose SEIS/EIS status after the investment?]

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Excluded-trade questions are binary: get the analysis wrong and every investor's relief disappears at once, usually after the money has been spent. A SuLe solicitor can test your business model against HMRC's list and frame your advance assurance application before you promise SEIS to anyone. Book a free SEIS/EIS readiness call and find out where your trade stands.

Keep reading: Is my startup eligible for SEIS? · What is the risk-to-capital condition? · How do I get SEIS/EIS advance assurance? · Can my company lose SEIS/EIS status after the investment? · What is SEIS and how does it work? · What is EIS and how does it work?

Primary sources: HMRC — Apply to use the Seed Enterprise Investment Scheme · HMRC — Apply to use the Enterprise Investment Scheme