The Seed Enterprise Investment Scheme (SEIS) helps very early-stage UK companies raise money by giving investors generous tax breaks. Investors get Income Tax relief at 50% on up to £200,000 invested each tax year. A company can raise a lifetime total of £250,000 through SEIS, must have gross assets under £350,000 and fewer than 25 full-time equivalent employees, and its trade must be under three years old. Hold the shares for three years and any growth is free of Capital Gains Tax.

What is SEIS?

SEIS is a government-backed venture capital scheme designed to make it easier for brand new companies to attract outside investment. Young trading companies often struggle to raise cash because the risk of failure is high. SEIS tackles this by rewarding investors with a package of tax reliefs that soften the downside and boost the potential return. It sits alongside the larger Enterprise Investment Scheme, and you can read our companion guide to the Enterprise Investment Scheme (EIS) for how the two schemes fit together.

The scheme was introduced in 2012 and made permanent in later Finance Acts. From 6 April 2023 the limits were expanded, so the figures below reflect the current, more generous rules.

How much relief do investors get?

SEIS is aimed squarely at individual investors, and the reliefs are among the most attractive in the UK tax system.

  • Income Tax relief at 50% of the amount subscribed for qualifying shares. Invest £10,000 and you can knock £5,000 off your Income Tax bill.
  • A maximum of £200,000 of investment each tax year on which relief can be claimed, a limit that applied from 6 April 2023 (it was previously £100,000). That is up to £100,000 of Income Tax relief in a single year.
  • Capital Gains Tax reinvestment relief. If you make a chargeable gain and put the proceeds into SEIS shares, up to 50% of the reinvested gain is exempt from CGT, capped at £100,000 of gain.
  • Tax-free growth. Provided you claimed and kept the Income Tax relief and hold the shares for at least three years, any gain when you eventually sell is free of Capital Gains Tax.
  • Loss relief. If the company fails, the loss on your shares (net of the Income Tax relief already given) can usually be set against income or gains, cushioning the blow.

You can carry back a subscription to the previous tax year, which can be handy if you have already used your current year allowance. Because CGT features so heavily in the numbers, it is worth understanding the wider Capital Gains Tax rates that apply to your other disposals.

Which companies qualify?

The company rules are strict because SEIS targets genuinely new ventures. When the shares are issued the company must meet each of the following tests, all as revised from 6 April 2023:

  • Total SEIS money raised: no more than £250,000 across the company’s lifetime (previously £150,000).
  • Gross assets: under £350,000 immediately before the shares are issued (previously £200,000).
  • Age of trade: the qualifying trade must be under three years old (previously two years).
  • Employees: fewer than 25 full-time equivalent employees at the time of issue.
  • It must be an unquoted company carrying on, or preparing to carry on, a new qualifying trade, and it must not be controlled by another company.

The money raised has to be spent on the qualifying trade within three years. Some activities, such as dealing in land, financial services and property development, are excluded. A company can apply to HMRC for advance assurance before approaching investors, which gives everyone confidence that the reliefs should be available. SEIS only works through a limited company, never a sole trader or partnership.

How does SEIS differ from EIS?

The two schemes share the same DNA but serve different stages of a company’s life. SEIS is for the earliest, riskiest days and offers a higher rate of Income Tax relief. EIS supports slightly more established companies with larger funding needs.

  • Income Tax relief: SEIS gives 50%, EIS gives 30%.
  • Annual investor limit: £200,000 for SEIS, considerably higher for EIS.
  • Company stage: SEIS is for a trade under three years old, EIS reaches older companies.
  • Company funding cap: £250,000 total for SEIS, with much larger lifetime limits for EIS.

In practice a company often uses SEIS first for its seed round and moves to EIS for later rounds. An investor can back the same company under both schemes in the same year. Remember that SEIS reliefs sit outside the company’s own tax position, so a founder should still get to grips with how Corporation Tax works once the business starts to make profits.

How do you claim?

The company issues you an SEIS3 certificate once HMRC has authorised it, usually after the company has been trading for four months or has spent most of the money raised. You then claim on your Self Assessment tax return, or by contacting HMRC, quoting the details from the certificate. Keep the SEIS3 safe, because you will need it if HMRC asks questions and you may need to reclaim relief later if you hold the shares to sell them tax free.

The reliefs can be withdrawn if the company or the investor breaks the rules within the three-year period, for example if you sell the shares early or receive value from the company. Careful record keeping matters, and professional advice is sensible given the sums involved. For a broader grounding in personal and business tax, our accountancy and tax guide is a useful starting point.

Is SEIS worth it?

For the right investor, the mix of 50% Income Tax relief, tax-free growth and downside loss relief makes SEIS one of the most tax-efficient ways to back a British start-up. The trade-off is risk: these are young, unproven companies, and the reliefs exist precisely because many will not succeed. Never invest solely for the tax break, and take advice suited to your circumstances.

Claiming SEIS reliefs, whether as investor or company, can invite HMRC scrutiny, and even a well-run claim can trigger an enquiry. Solar Protect tax investigation insurance covers up to £100,000 of your accountant’s fees in defending an HMRC enquiry, with no excess to pay, so you can respond properly without worrying about the cost. To protect your position, get a quote today or contact us to talk it through.

Reviewed by Matthew Bartlett, Director, Solar Protect. This guide is general information, not personalised tax or financial advice. Figures are correct for the 2025/26 and 2026/27 UK tax years at the time of writing.