Comparison · Investment Tax Relief · 2026/27
SEIS vs EIS: Which Investment Tax Relief is Right for You? 2026/27
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are two of the most generous tax reliefs available to UK investors in 2026/27. SEIS offers 50% income tax relief on up to GBP 200,000 invested in very early-stage startups; EIS offers 30% relief on up to GBP 1,000,000 in slightly larger qualifying companies. Both schemes exempt gains from CGT after a 3-year holding period and offer loss relief if the company fails. Choosing between them -- or using both -- depends on the stage of the company, your risk appetite, and how much you want to invest. This guide covers every material difference, with a worked example for a GBP 20,000 investment in each.
2026/27 Key Figures at a Glance
- SEIS income tax relief: 50% of amount invested (up to GBP 200,000/year)
- EIS income tax relief: 30% of amount invested (up to GBP 1,000,000/year)
- SEIS maximum annual investment: GBP 200,000 per investor per tax year
- EIS maximum annual investment: GBP 1,000,000 (or GBP 2,000,000 if at least GBP 1,000,000 is in knowledge-intensive companies)
- CGT exemption (both schemes): 100% exemption on gains after 3-year hold
- Loss relief (both schemes): Available at your marginal income tax rate on net cost after initial relief
- Holding period required: Minimum 3 years from share issue to retain relief
Side-by-Side Comparison
| Feature | SEIS | EIS |
|---|---|---|
| Income tax relief rate | 50% of investment | 30% of investment |
| Max annual investment | GBP 200,000 | GBP 1,000,000 (GBP 2,000,000 for KICs) |
| CGT exemption on gains | 100% after 3-year hold | 100% after 3-year hold |
| Loss relief | Yes -- on net cost at marginal rate | Yes -- on net cost at marginal rate |
| Company size limits | Under GBP 350k gross assets; under 25 employees; under 3 years trading | Under GBP 15M gross assets; under 250 employees; under 7 years trading |
| Holding period | Minimum 3 years | Minimum 3 years |
| CGT deferral relief | Not available (50% CGT reinvestment relief instead) | Yes -- defer gains from any asset sale |
| Carry back to prior year | Yes -- up to 1 prior tax year | Yes -- up to 1 prior tax year |
What is SEIS?
The Seed Enterprise Investment Scheme was introduced in 2012 to stimulate investment in the very earliest and riskiest stage of UK startups. In 2023, the government permanently raised the investor limit from GBP 100,000 to GBP 200,000 per year and the company fundraising limit from GBP 150,000 to GBP 250,000, making SEIS significantly more attractive for both founders and angels.
For 2026/27 the key SEIS investor relief is 50% income tax relief: invest GBP 10,000 in a qualifying SEIS company and you get GBP 5,000 off your income tax bill for that year. Relief can be carried back to the previous tax year if you prefer. The shares must be held for at least 3 years. After 3 years any capital gain on the SEIS shares is exempt from CGT entirely. If the company fails, you can claim loss relief at your marginal income tax rate on the net cost after the 50% relief -- reducing the effective downside substantially for higher-rate taxpayers.
SEIS also offers a unique CGT reinvestment relief: if you have made a chargeable gain elsewhere in the same tax year, 50% of the gain can be sheltered from CGT by reinvesting it into SEIS (up to GBP 100,000 of qualifying gains). This is separate from -- and in addition to -- the 50% income tax relief.
What is EIS?
The Enterprise Investment Scheme is the more established of the two schemes, having existed since 1994. EIS targets companies that have moved past the seed stage -- typically those with some trading history, a modest revenue base, and a credible growth plan, but still unquoted and qualifying under HMRC rules. The income tax relief rate is 30% (compared with 50% for SEIS) but the annual investment ceiling of GBP 1,000,000 (or GBP 2,000,000 for knowledge-intensive companies) is five times higher, making EIS the go-to scheme for investors who want to deploy larger amounts.
EIS also offers CGT deferral relief -- a powerful feature unavailable under SEIS. If you have a capital gain on any asset (shares, property, a business sale), you can defer paying CGT on that gain indefinitely by investing the proceeds into EIS shares. The deferred gain crystallises when you sell the EIS shares. If you then hold those shares for 3 years and sell them at a profit, the EIS gain itself is CGT-free -- though the original deferred gain does still become payable on disposal of the EIS shares.
EIS companies can raise up to GBP 12,000,000 in total lifetime EIS/SEIS investment (GBP 20,000,000 for knowledge-intensive companies). Investors in EIS companies benefit from the same 3-year qualifying holding period, the same CGT exemption on growth, and the same loss relief provisions as SEIS investors.
Pros and Cons
SEIS -- Pros
- +Highest relief rate in UK tax law at 50%
- +CGT reinvestment relief shelters up to GBP 100k of gains
- +Access to the earliest growth stage -- highest potential upside
- +Loss relief at marginal rate on net cost limits downside significantly
- +Can stack IHT Business Relief after 2 years
SEIS -- Cons
- -Very high failure rate -- most seed-stage startups do not survive
- -Annual limit of GBP 200k limits deployment for larger investors
- -No CGT deferral relief available
- -Highly illiquid -- no secondary market for most SEIS shares
- -Complex HMRC advance assurance process for companies
EIS -- Pros
- +Higher annual limit -- up to GBP 2M with knowledge-intensive companies
- +CGT deferral relief available on gains from any asset class
- +Wider pool of qualifying companies -- more established, lower failure rate
- +EIS funds available for diversified exposure
- +IHT Business Relief stacks after 2 years of holding
EIS -- Cons
- -Lower relief rate of 30% vs SEIS 50%
- -Still highly illiquid with a 3-year minimum lock-up
- -No CGT reinvestment relief (unlike SEIS)
- -Company eligibility rules can be complex to verify
- -Deferred CGT gain still crystallises on EIS share disposal
Worked Example: GBP 20,000 Invested Under Each Scheme
The following examples assume a higher-rate taxpayer (40% income tax) investing GBP 20,000 in a qualifying company in 2026/27 and holding for at least 3 years. We show three outcomes: the company succeeds and the shares triple in value; the company fails completely; and the company returns capital only (break-even exit).
Scenario A -- SEIS: GBP 20,000 invested, company triples in value
- Investment: GBP 20,000
- Income tax relief (50%): GBP 10,000 tax saving in year of investment
- Net cost after relief: GBP 10,000
- Exit value after 3+ years: GBP 60,000
- Capital gain: GBP 40,000 -- CGT-exempt after 3-year hold
- Total return on GBP 10,000 net cost: GBP 60,000 (600%)
Scenario B -- EIS: GBP 20,000 invested, company triples in value
- Investment: GBP 20,000
- Income tax relief (30%): GBP 6,000 tax saving in year of investment
- Net cost after relief: GBP 14,000
- Exit value after 3+ years: GBP 60,000
- Capital gain: GBP 40,000 -- CGT-exempt after 3-year hold
- Total return on GBP 14,000 net cost: GBP 60,000 (429%)
Scenario C -- SEIS: GBP 20,000 invested, company fails (total loss)
- Investment: GBP 20,000
- Income tax relief (50%): GBP 10,000 recovered
- Net cost: GBP 10,000
- Exit value: GBP 0
- Loss relief at 40% on GBP 10,000 net cost: GBP 4,000 additional tax saving
- Effective total loss: GBP 6,000 on a GBP 20,000 investment (70% recovered via relief)
Scenario D -- EIS: GBP 20,000 invested, company fails (total loss)
- Investment: GBP 20,000
- Income tax relief (30%): GBP 6,000 recovered
- Net cost: GBP 14,000
- Exit value: GBP 0
- Loss relief at 40% on GBP 14,000 net cost: GBP 5,600 additional tax saving
- Effective total loss: GBP 8,400 on a GBP 20,000 investment (58% recovered via relief)
Which Scheme is Right for You?
The choice between SEIS and EIS often comes down to three factors: the stage of the company you want to invest in, how much you want to invest, and whether you have a capital gain you want to defer.
If you are an angel investor looking at pre-revenue startups with a founding team and an idea -- SEIS is almost certainly the right fit. The 50% relief compensates for the very high failure rate at this stage, and the CGT reinvestment relief can shelter gains from a property or business sale in the same year.
If you are investing GBP 100,000 or more, or you prefer companies with at least some track record (a product in market, early revenues, a Series A round) -- EIS is likely more appropriate. The GBP 1,000,000 annual limit gives you much more headroom, and CGT deferral is a powerful tool for investors who have sold a business or investment property.
Many experienced angel investors use both: SEIS for a small allocation to the earliest deals where they want maximum relief, and EIS for the bulk of their portfolio where they are deploying more capital into more mature companies. The schemes are complementary, not mutually exclusive. Always take regulated financial advice before committing -- SEIS and EIS investments are high-risk, illiquid, and suitable only for investors who can afford to lose the entire amount invested.