SEIS Income Tax Relief: A Full Worked Example 2026/27
The Seed Enterprise Investment Scheme gives investors 50% Income Tax relief on up to £200,000 a year invested in the very earliest-stage UK companies. Here is exactly how the relief and CGT reinvestment relief work together in 2026/27.
The headline relief
SEIS is designed for the earliest, highest-risk stage of company investment: companies typically trading for under two years with gross assets below £350,000. To compensate investors for that risk, SEIS offers 50% Income Tax relief on qualifying investments up to £200,000 per tax year — a materially higher rate than EIS's 30%.
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Open Income Tax calculatorWorked example: £50,000 SEIS investment
Chidi, a higher-rate taxpayer with an Income Tax liability well above £25,000 for the year, invests £50,000 into qualifying SEIS shares.
| Step | Amount |
|---|---|
| Amount invested | £50,000 |
| SEIS Income Tax relief (50%) | £25,000 |
| Net cost after relief | £25,000 |
Chidi's £50,000 investment effectively costs him £25,000 after the relief, assuming he has sufficient Income Tax liability in the year to absorb the full £25,000 reduction.
Worked example: combining reinvestment relief with a capital gain
Nadia has a £40,000 capital gain from selling a rental property in 2026/27 and reinvests £40,000 of it into SEIS shares in the same tax year.
| Element | Amount |
|---|---|
| Original capital gain | £40,000 |
| Reinvested into SEIS | £40,000 |
| SEIS Income Tax relief (50% of investment) | £20,000 |
| SEIS reinvestment relief — CGT exempted (50% of the gain) | £20,000 exempt from CGT |
| Remaining taxable gain | £20,000 (still taxed at the applicable CGT rate) |
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Open Capital Gains Tax calculatorNadia gets £20,000 of Income Tax relief on the investment itself, and separately shelters half of her original £40,000 gain from CGT by reinvesting into SEIS — a combined benefit that is one of the more powerful (if narrowly targeted) tax-planning tools available to UK investors with capital gains to reinvest.
Carrying relief back a year
If Chidi's Income Tax liability in 2026/27 is too small to absorb the full £25,000 relief, he can elect to carry back some or all of the investment to be treated as made in 2025/26 instead, using up that year's Income Tax liability if it is larger — a useful option for investors whose income varies significantly year to year.
The three-year rule and tax-free growth
Provided Chidi holds his SEIS shares for at least three years and the relief is not withdrawn, any eventual gain on selling the shares is completely free of Capital Gains Tax — a valuable second-stage benefit on top of the initial 50% Income Tax relief, though it only pays off if the underlying company succeeds and grows in value.
Frequently asked questions
How much Income Tax relief does SEIS give?
SEIS gives 50% Income Tax relief on the amount invested, up to a maximum qualifying investment of £200,000 per tax year — meaning an investor putting £200,000 into qualifying SEIS shares could claim up to £100,000 of Income Tax relief, provided they have sufficient Income Tax liability in the relevant year to absorb it.
How is SEIS different from EIS in terms of relief rate?
SEIS gives 50% Income Tax relief, roughly and deliberately higher than EIS's 30%, reflecting that SEIS targets even earlier-stage, higher-risk companies (typically those that have been trading for less than two years and have gross assets under £350,000) than the more established early-stage companies EIS supports. The higher relief rate compensates investors for the higher failure risk at this earliest stage.
Do I need enough Income Tax liability to use the full relief?
Yes — SEIS relief can only reduce your Income Tax bill to nil in a given year; it cannot create a repayment beyond tax actually due, and unused relief cannot generally be carried forward to a future year (though you can elect to carry the relief back one tax year, effectively treating the investment as made in the prior year for relief purposes).
What is SEIS reinvestment relief and how does it work alongside the Income Tax relief?
SEIS reinvestment relief lets you exempt up to 50% of a capital gain from Capital Gains Tax if you reinvest the gain into SEIS shares in the same tax year, on top of the separate 50% Income Tax relief on the investment itself — meaning a gain reinvested into SEIS can benefit from both an Income Tax reduction and a CGT exemption on half the original gain, a genuinely powerful combined incentive.
How long do I need to hold SEIS shares to keep the relief?
You must hold SEIS shares for at least three years from the date of issue to retain the Income Tax relief; if you dispose of them earlier (other than through the company failing or being acquired in a qualifying way), some or all of the relief can be clawed back by HMRC.
Are gains on SEIS shares tax-free when I eventually sell?
Yes — provided the shares have been held for the qualifying three-year period and Income Tax relief was validly claimed and not withdrawn, any gain on disposal of SEIS shares is entirely exempt from Capital Gains Tax, which is a separate and additional benefit on top of the upfront Income Tax relief.
What happens if the SEIS company fails?
As with EIS, SEIS loss relief lets you offset the net loss (the amount invested minus the 50% Income Tax relief already claimed) against your Income Tax or Capital Gains Tax, which — combined with the higher 50% upfront relief — means the real cash-at-risk on a failed SEIS investment can be a genuinely small fraction of the amount originally invested.
Can I invest in both SEIS and EIS in the same tax year?
Yes, there is nothing preventing an investor from using both the £200,000 SEIS allowance and the (much larger) £1 million or £2 million EIS allowance in the same tax year, subject to having sufficient Income Tax liability to absorb both sets of relief, and each investment separately meeting its own scheme's qualifying conditions.
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