What is SEIS and how does it work in the UK?

Full answer

SEIS, the Seed Enterprise Investment Scheme, is a government scheme that offers generous tax reliefs to individuals who invest in very early-stage UK companies. It is designed to encourage risk capital into startups that may struggle to access conventional funding. For 2026/27 the key reliefs are: Income Tax relief at 50% on investments of up to £200,000 per tax year. So if you invest £20,000 in qualifying SEIS shares, you can reduce your Income Tax bill by £10,000, as long as you have enough tax liability to set it against. The relief is given in the year of investment, or you can carry it back to the previous year. Capital Gains Tax exemption: any gain on SEIS shares held for at least 3 years is completely exempt from CGT, making the upside entirely tax-free. Loss relief: if the company fails and your shares are worth nothing, you can claim loss relief. The allowable loss (investment minus any Income Tax relief already received) can be set against income, saving up to 45p of Income Tax for every pound of loss -- which materially reduces the downside risk. CGT disposal relief: if you sell a chargeable asset and reinvest all or part of the gain into SEIS shares in the same or the following tax year, 50% of the reinvested gain is exempt from CGT. SEIS is distinct from EIS (Enterprise Investment Scheme), which applies to more established companies. SEIS companies must be less than 3 years old from their first commercial sale, have fewer than 25 full-time employees, and have gross assets of no more than £350,000. The company must apply for advance assurance from HMRC. Investors must hold shares for at least 3 years to keep the Income Tax relief. Use a savings or investment calculator to model the effect of SEIS tax reliefs on your net return.

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