SEIS Tax Relief UK 2026/27: Seed Enterprise Investment Scheme Explained
SEIS explained for 2026/27: 50% income tax relief on up to £200,000 per year, CGT exemption after 3 years, loss relief, and how SEIS compares to EIS for early-stage startup investors.
What is SEIS?
The Seed Enterprise Investment Scheme (SEIS) is a UK government scheme designed to help very early-stage startups raise equity finance by offering generous tax incentives to individual investors. It is one of the most tax-efficient investment vehicles available in the UK.
SEIS sits alongside the Enterprise Investment Scheme (EIS) but targets earlier-stage companies than EIS. While EIS can accommodate companies that have been trading for some years, SEIS is for companies in their infancy -- typically pre-revenue or very early revenue, usually less than 2 years into trading.
The scheme was introduced in 2012 and was substantially enhanced from April 2023, when the annual investment limit doubled from £100,000 to £200,000.
SEIS is high risk. Many startups fail. The tax reliefs are generous precisely because investors are taking on significant risk of losing their entire investment. Before investing, assess whether you can afford to lose the money entirely.
Income tax relief: how it works
The relief
SEIS gives 50% income tax relief on qualifying investments. This means:
- Invest £10,000 in SEIS shares -- your income tax bill falls by £5,000.
- Invest £200,000 (the annual maximum) -- your income tax bill falls by £100,000.
The relief reduces your income tax liability pound for pound. It is not a deduction from income (like a pension contribution); it is a direct reduction of the tax owed.
The relief is available regardless of your tax rate -- basic-rate, higher-rate, or additional-rate taxpayers all receive 50% relief. However, you must have sufficient income tax liability in the year to absorb the relief. If the relief exceeds your tax bill, you cannot carry the excess forward (but see carry-back below).
Annual limit
The maximum SEIS investment is £200,000 per tax year (2026/27). This applies per investor, across all SEIS companies invested in during the year.
Carry-back
You can elect to treat a SEIS investment made in one tax year as if it were made in the previous tax year (subject to the previous year's limit being available). This allows you to:
- Claim relief in a higher-income year.
- Offset a large tax bill from a previous year.
Example: you invested £50,000 in SEIS in April 2026 (tax year 2026/27). If your income was higher in 2025/26, you can carry back the investment to 2025/26 and receive a £25,000 refund of 2025/26 income tax.
You make the carry-back election on your Self Assessment return.
CGT exemption after 3 years
Gains on SEIS shares are completely exempt from Capital Gains Tax provided:
- You have held the shares for at least 3 years from the date of issue (or the date the company began trading if that is later).
- The SEIS income tax relief on those shares has not been withdrawn (e.g. because you sold before 3 years or the company lost its qualifying status).
There is no limit on the size of gain that can be exempt. A £10,000 investment that grows to £500,000 -- the entire £490,000 gain is tax-free.
This exemption is on top of your annual CGT exempt amount (£3,000 in 2026/27), but the SEIS gain does not even need to be counted against it.
CGT re-investment relief
SEIS also provides a unique CGT deferral for investors who reinvest gains into SEIS.
If you make a capital gain on any asset (shares, property, etc.) and reinvest up to 50% of the gain into SEIS shares in the same tax year (or one year before/after), the reinvested amount is exempted from CGT. Not just deferred -- permanently exempt for the re-invested portion.
Example: you sell shares in a listed company and make a £100,000 gain. Normally: CGT at 18-24% = £18,000-£24,000.
Instead, you reinvest £50,000 into a SEIS company in the same tax year:
- The £50,000 reinvested portion is CGT-exempt.
- The remaining £50,000 gain is still taxable.
- You also get 50% income tax relief on the £50,000 SEIS investment (£25,000 reduction in income tax).
Combined tax saving: £9,000-£12,000 CGT saved + £25,000 income tax relief = potentially £34,000-£37,000 in total tax savings on a £50,000 investment.
Loss relief
SEIS is high-risk investing. Companies fail. But if your SEIS investment becomes worthless, you can claim loss relief.
The loss is calculated as: Investment amount minus SEIS income tax relief already received.
Example:
- You invested £20,000 in SEIS shares.
- You received 50% income tax relief: £10,000 reduction in your tax bill.
- The company fails. The shares are worth £0.
- Allowable loss: £20,000 - £10,000 = £10,000.
You can set this £10,000 loss against:
- Income in the same or previous tax year (income loss relief): saving income tax at your marginal rate (40% higher rate = £4,000 tax saving).
- Capital gains in the same or previous tax year: saving CGT at 18-24%.
Combined with the original income tax relief, the effective downside of a failed SEIS investment is significantly cushioned. On a £20,000 total loss:
- SEIS income tax relief received: £10,000.
- Loss relief (at 40%): £4,000.
- Maximum government contribution to the loss: £14,000 out of £20,000.
- Effective investor loss: £6,000 (30% of original investment).
Qualifying company conditions
Not all startups can offer SEIS. The company must meet strict conditions at the time of share issue:
Company conditions
- UK-based: must be a UK-incorporated company with a UK permanent establishment.
- Qualifying trade: must carry on (or intend to carry on within 2 years) a qualifying trade. Excluded trades are similar to EIS: banking, insurance, property development, legal, accountancy, energy generation (certain), farming.
- Gross assets: must not exceed £350,000 before the SEIS investment is received.
- Employees: must have fewer than 25 full-time equivalent employees.
- New company: must not have been trading for more than 2 years at the date of share issue.
- Independence: must not be a subsidiary of or controlled by another company.
- Not previously raised EIS or VCT: a company that has already raised EIS or VCT funding cannot also offer SEIS.
Maximum SEIS raise
A company can raise a maximum of £250,000 in total from SEIS investors (across all rounds of SEIS fundraising). Once this limit is reached, the company must use EIS or other methods for further fundraising.
Advance Assurance
The company can apply to HMRC for Advance Assurance before the share issue, confirming that the company and the proposed shares are likely to qualify. This gives investors comfort before committing funds. Advance Assurance is not a guarantee but is taken seriously by sophisticated investors.
After the share issue, the company applies for a SEIS 1 certificate from HMRC. This certificate is sent to investors, who use it to claim their tax relief on their Self Assessment return.
How to claim SEIS relief
- Invest in a SEIS-qualifying company -- directly or through a SEIS fund.
- Receive the SEIS 1 certificate from the company (issued by HMRC via the company).
- Claim on Self Assessment: enter the relief on your Self Assessment tax return for the tax year of investment (or the previous year if carrying back).
- Relief reduces your tax bill -- or generates a repayment if you have already paid tax on account.
SEIS vs EIS: a comparison
| SEIS | EIS | |
|---|---|---|
| Income tax relief | 50% | 30% |
| Annual investor limit | £200,000 | £1,000,000 (£2m knowledge-intensive) |
| CGT on gains | Exempt after 3 years | Exempt after 3 years |
| CGT deferral | Permanent re-investment relief (50% of existing gain) | Full deferral relief |
| Loss relief | Yes (net of income tax relief) | Yes (net of income tax relief) |
| Company gross assets | Under £350,000 | Under £15 million |
| Company employees | Under 25 FTE | Under 250 FTE |
| Company trading | Under 2 years | Under 7 years (10 for KIC) |
| Company max raise | £250,000 | £12 million (£20m KIC) |
The key distinction: SEIS is for the very earliest, smallest startups. EIS covers a wider range of growth companies. The higher SEIS relief (50% vs 30%) reflects the higher risk.
Practical considerations
- Professional advice is essential -- SEIS is complex. Tax positions depend on individual circumstances. Use a regulated financial adviser or tax specialist.
- Due diligence -- the tax relief does not make a bad investment good. Conduct proper due diligence on the company, its founders, and the market.
- Diversification -- SEIS funds spread risk across multiple startups, which is usually preferable to concentrating in a single company.
- Liquidity -- SEIS shares are illiquid. There is typically no market to sell them. Your capital is tied up until the company exits, fails, or buys back shares.
- Timeline -- SEIS investments are a minimum 3-year commitment for the CGT exemption.
Income Tax Calculator
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Income tax calculatorCapital Gains Tax Calculator
Calculate Capital Gains Tax on property, shares and other assets for 2025/26.
Capital gains tax calculatorSources
- HMRC: Seed Enterprise Investment Scheme
- HMRC: SEIS -- for investors
- HM Treasury: Finance Act 2023 -- SEIS enhancements
- FCA: SEIS authorised funds register
Frequently asked questions
What is the SEIS income tax relief rate in 2026/27?
SEIS provides 50% income tax relief on investments up to £200,000 per tax year. So a £10,000 SEIS investment reduces your income tax bill by £5,000, regardless of whether you are a basic or higher-rate taxpayer.
How long must I hold SEIS shares to keep the tax relief?
You must hold SEIS shares for at least 3 years from the date of issue (or from the date the company began trading, if later). Disposing of the shares before 3 years triggers clawback of the income tax relief.
Are gains on SEIS shares exempt from Capital Gains Tax?
Yes. If you hold SEIS shares for at least 3 years and the income tax relief was not withdrawn, any gains on disposal are completely exempt from CGT. This applies regardless of the size of the gain.
What is SEIS loss relief?
If SEIS shares become worthless (the company fails), you can claim loss relief. The loss is calculated after deducting the SEIS income tax relief already received. You can set this loss against income (at your marginal rate) or capital gains in the same or previous tax year.
What type of company qualifies for SEIS?
The company must be UK-based, carrying on a qualifying trade, have gross assets of no more than £350,000 before the SEIS investment, employ fewer than 25 full-time equivalent employees, and have been trading for fewer than 2 years when shares are issued.
Can I invest in SEIS shares through a fund?
Yes. SEIS funds invest in a portfolio of qualifying startups on your behalf, spreading the risk. The tax reliefs pass through to you as the investor. SEIS fund managers are authorised by the FCA.
What is the difference between SEIS and EIS?
SEIS targets very early-stage startups (under 2 years trading, gross assets under £350,000) and offers 50% income tax relief on up to £200,000. EIS targets more developed companies and offers 30% relief on up to £1 million per year (£2 million if targeting knowledge-intensive companies). EIS has a 3-year CGT deferral, not outright exemption.
Can I carry back SEIS relief to a previous tax year?
Yes. SEIS income tax relief can be carried back to the previous tax year, subject to the annual investment limit applying to that year. This is useful if you have a high-income year followed by a lower-income year.
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In-depth guides
Related reading
EIS Enterprise Investment Scheme: 30% Tax Relief Guide 2026/27
Claim 30% income tax relief on up to GBP 1 million through EIS investments in 2026/27, with CGT deferral and loss relief on top.
VCT Tax Relief: How Venture Capital Trusts Work for UK Investors in 2026
VCTs offer 30% income tax relief on up to £200,000 per year. Find out how Venture Capital Trusts work, the risks involved, and how they compare to EIS and SEIS in 2026.
SEIS Investment Guide: 50% Tax Relief for UK Investors 2026/27
Claim 50% income tax relief on up to GBP 200,000 through SEIS investments in 2026/27 -- here is everything you need to know.