Tax Relief · 2026/27
SEIS Tax Relief UK 2026/27: Seed Enterprise Investment Scheme Guide
The Seed Enterprise Investment Scheme (SEIS) offers some of the most generous tax reliefs available in the UK -- 50% income tax relief on investments up to £200,000 per year in qualifying early-stage companies, CGT exemption on any gains after 3 years, and loss relief if the investment fails. This guide explains the rules for investors and the qualifying criteria for companies, and compares SEIS with EIS.
What Is SEIS?
SEIS was introduced in April 2012 to help very early-stage UK companies raise investment from private investors. The scheme offers generous tax reliefs to compensate for the high risk of investing in seed-stage startups. From April 2023, the annual investor limit was doubled to £200,000 and the company investment limit rose to £250,000.
SEIS sits alongside the Enterprise Investment Scheme (EIS), which targets more established growth companies. SEIS is the more generous scheme (50% vs 30% income tax relief) but is restricted to smaller, earlier-stage companies.
Together, SEIS and EIS have channelled billions of pounds into UK startups since their introduction. Both schemes require HMRC advance assurance and compliance certificates for investors to claim relief.
SEIS Tax Reliefs for Investors (2026/27)
1. Income Tax Relief -- 50%
Invest up to £200,000 in qualifying SEIS shares in a tax year and claim 50% income tax relief. The relief reduces your income tax bill directly -- it is not a deduction from income.
Maximum relief: £100,000 per year (50% of £200,000). You must have at least that much income tax liability to use the full relief. Unused relief can be carried back one year.
Example: You invest £50,000 in a SEIS company. Your income tax bill is reduced by £25,000. Net cost of the investment = £25,000. If the company fails, your worst case is losing £25,000 (your net outlay) -- the other £25,000 was tax relief.
2. CGT Exemption
If you hold SEIS shares for at least 3 years and the income tax relief has not been withdrawn, any gain on disposal is entirely exempt from Capital Gains Tax. With standard CGT rates at 18%/24% (or 18% BADR rate), this is a significant benefit on any successful exit.
3. CGT Reinvestment Relief
If you realise a capital gain elsewhere and reinvest it into SEIS shares in the same tax year, 50% of the gain is exempt from CGT. This stacks on top of the income tax relief.
Example: You sell an investment property making a gain of £100,000. You invest £100,000 in SEIS shares. CGT reinvestment relief exempts £50,000 of the gain. You also get 50% income tax relief (£50,000 reduction in income tax). Combined, you save a substantial tax bill while backing a startup.
4. Loss Relief
If your SEIS shares become worthless or are disposed of at a loss, loss relief is available. The loss for relief purposes is the net investment after income tax relief. This can be set against capital gains or income.
Example: You invest £40,000. After 50% relief, net cost is £20,000. The company fails. You can claim loss relief on £20,000 -- potentially recovering up to £9,000 (at 45% income tax rate) of your net outlay, meaning your worst-case loss is only £11,000 on a £40,000 gross investment.
SEIS vs EIS: Key Differences
| Feature | SEIS | EIS |
|---|---|---|
| Income tax relief | 50% | 30% |
| Annual investor limit | £200,000 | £1m (£2m for KIC) |
| Company age limit | Trading < 2 years | Trading < 7 years (10 for KIC) |
| Max FTE employees | < 25 | < 500 |
| Max gross assets | < £350,000 | < £15m before / £16m after |
| Company raise limit | £250,000 total | £12m lifetime (£20m for KIC) |
| CGT exemption (3 yrs) | Yes | Yes |
| Loss relief | Yes | Yes |
| CGT reinvestment relief | 50% of gain | Deferral only |
Company Qualifying Criteria for SEIS
For a company to issue SEIS-qualifying shares, it must:
- Be UK resident and carrying on (or preparing to carry on) a qualifying trade.
- Have gross assets of no more than £350,000 at the time of the share issue.
- Have fewer than 25 full-time equivalent employees.
- Have been trading for no more than 2 years at the time of the share issue.
- Not be AIM-listed or on a recognised stock exchange.
- Carry on a qualifying trade: most commercial activities qualify; excluded trades include banking, insurance, property dealing/development, leasing, legal and accountancy services, and running hotels/care homes.
Before issuing SEIS shares, the company should obtain SEIS advance assurancefrom HMRC. This is not mandatory but strongly recommended -- it confirms the company and the proposed investment structure qualify before any money is raised.
After raising the investment and meeting the conditions for the minimum 4-month operating period, the company can apply for SEIS compliance certificates (SEIS3) and issue them to investors to claim their relief.
Rules Investors Must Follow
To keep the tax reliefs, investors must:
- Hold the shares for at least 3 years from issue (or from when trade starts, if later). Selling within 3 years withdraws the income tax relief.
- Not be connected to the company in a disqualifying way. You can be an employee of the company, but you cannot be a partner or a substantial investor (over 30% of ordinary share capital or voting rights).
- Not receive value from the company (loans, artificially high remuneration, etc.) that effectively returns the investment during the qualifying period.
Worked Example
Rachel earns £120,000 as a consultant. In 2026/27 she invests £40,000 in a SEIS-qualifying startup.
| Item | Amount |
|---|---|
| Gross investment | £40,000 |
| Income tax relief (50%) | -£20,000 |
| Net cost to Rachel | £20,000 |
| 5 years later, company exit at £200,000 for her shares | £200,000 proceeds |
| CGT on £160,000 gain (held over 3 years) | £0 (SEIS CGT exemption) |
| Net profit on £20,000 net outlay | £180,000 |
In the failure scenario: if the company fails, Rachel loses her net £20,000, and can claim loss relief of up to £9,000 (at 45% tax rate), leaving a worst-case net loss of approximately £11,000 on a £40,000 gross investment.
Risks of SEIS Investing
- Very high failure rate: most seed-stage startups fail. Even with tax reliefs, you can lose all remaining capital.
- Illiquidity: there is no secondary market for SEIS shares. You cannot sell easily before an exit event.
- Relief withdrawal: if you break the rules (sell within 3 years, the company loses qualifying status, you receive value from the company), relief can be clawed back with interest.
- Due diligence required: HMRC advance assurance confirms the company qualifies structurally -- it does not evaluate the business case. You must do your own investment due diligence.
Only invest what you can afford to lose. Even with generous tax reliefs, SEIS is high-risk. Never invest retirement savings or money you cannot afford to lose in full.