Pillar Guide · Updated June 2026
SEIS (Seed Enterprise Investment Scheme) 2026: Complete Investor Guide
SEIS offers 50% income tax relief, CGT exemption, and loss protection for investors in very early-stage UK companies. This guide explains qualifying conditions for companies and investors, how the reliefs work in practice, CGT reinvestment relief, and the path from SEIS to EIS follow-on funding.
Key Figures 2026/27
- Income tax relief: 50%
- Maximum SEIS investment: £200,000/year
- CGT exemption: after 3 years
- CGT annual exempt amount: £3,000
- CGT reinvestment relief: 50% of gain
- Company gross assets: below £350,000
What Is SEIS?
The Seed Enterprise Investment Scheme (SEIS) is a government-backed initiative designed to encourage investment into very early-stage UK companies by offering generous tax reliefs. Investors can receive 50% income tax relief on investments of up to £200,000 per tax year (the limit was doubled from £100,000 in April 2023). Gains made on qualifying SEIS shares are completely exempt from capital gains tax if the shares are held for at least three years.
Loss relief, CGT reinvestment relief, and inheritance tax business property relief may also be available. SEIS is the most generous of the UK's venture capital tax schemes, reflecting the higher risk associated with very early-stage investment.
Qualifying Company Conditions
To issue SEIS shares, a company must meet strict conditions at the time of share issue. The company must be less than 3 years old (measured from the date the trade commenced). It must have fewer than 25 full-time equivalent employees. Gross assets must not exceed £350,000 immediately before the share issue.
The company must carry on a qualifying trade — financial services, property development, legal services, accountancy, energy generation, and certain other trades are excluded. The company must not have previously received investment under the Enterprise Investment Scheme (EIS) or from a Venture Capital Trust (VCT). The maximum amount a company can raise under SEIS is £250,000 in total.
Investor Qualifying Conditions
Investors must meet their own qualifying conditions. You must be a UK resident (or treated as UK-resident) in the tax year for which you claim relief. You must not be connected with the company — this means you cannot be an employee, or own (or have an associate own) more than 30% of the company's ordinary share capital.
Directors can invest under SEIS if they are paid-only directors receiving no salary (a specific SEIS exception), but employee-directors generally cannot. You must hold the shares for at least three years from the date of issue. If you dispose of the shares before three years, some or all of the relief is withdrawn.
The 50% Income Tax Relief
SEIS income tax relief is a tax reducer, not merely a deduction. If you invest £10,000 in qualifying SEIS shares, your income tax bill falls by £5,000 — regardless of your marginal tax rate, provided you have at least £5,000 of income tax liability for the year. This makes SEIS valuable at all tax rates, though the effective cost after relief is higher for basic-rate taxpayers (net cost £5,000 out of pocket on a £10,000 investment) than for additional-rate taxpayers who also get other benefits.
If you cannot use the full relief in the current year (because your tax liability is too low), you can carry back the investment to the previous tax year. The company must issue form SEIS3 to confirm your entitlement.
CGT Exemption on SEIS Gains
If you hold qualifying SEIS shares for at least three years and the company remains a qualifying SEIS company throughout, any gain on disposal is completely exempt from capital gains tax. There is no upper limit on the exempt gain — a £10,000 investment that grows to £500,000 produces a £490,000 CGT-exempt gain.
The CGT annual exempt amount of £3,000 is not needed — the full gain is exempt. This is the most powerful long-term benefit of SEIS, as it allows investors in high-growth early-stage companies to realise very large gains without any CGT liability, provided the qualifying conditions are maintained throughout the holding period.
CGT Reinvestment Relief
In addition to income tax relief, investors can use SEIS to shelter capital gains arising on other assets. If you realise a capital gain from selling, say, shares or a buy-to-let property, you can invest some or all of that gain into SEIS shares and shelter 50% of the reinvested gain from CGT.
Example: you sell shares realising a £30,000 gain. You invest £30,000 in SEIS. You can shelter 50% of £30,000 = £15,000 from CGT. This reinvestment relief is available on top of income tax relief — you claim both for the same investment. The relieved gain is reduced from your CGT computation in the year of disposal.
SEIS Loss Relief
One of SEIS's most important protections is loss relief if the company fails. After income tax relief of 50%, your net investment is effectively 50p per £1 invested (ignoring CGT reinvestment relief). If the company becomes worthless, you can claim income tax loss relief on this net amount.
At a 45% additional-rate tax rate, the loss relief is 45% of 50p = 22.5p per £1 originally invested. Combined with the 50p income tax relief already received, HMRC has effectively contributed 72.5p per £1, meaning your maximum net loss is 27.5p in the pound. For a basic-rate taxpayer, the maximum net loss is 40p per £1 invested.
EIS Follow-On and Advance Assurance
Once a company has raised its maximum SEIS funding (£250,000), it can progress to raise Enterprise Investment Scheme (EIS) funding. EIS offers 30% income tax relief on investments of up to £1,000,000 per year (£2,000,000 for knowledge-intensive companies). Both SEIS and EIS investors may qualify in the same company — SEIS for the initial seed round and EIS for subsequent rounds.
Investors considering a significant SEIS commitment should request advance assurance from HMRC before investing — the company applies and HMRC confirms (provisionally) that the company and the shares are likely to qualify. This reduces — but does not eliminate — the risk of HMRC refusing relief.