SEIS & EIS Tax Relief
Complete Guide for 2026
SEIS gives angels 50% income tax relief. EIS gives 30%. Together, they make UK early-stage investing the most tax-efficient in the world. Here's exactly how both schemes work — for founders raising and investors deploying.
Why SEIS and EIS Matter So Much
The UK's Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are not just nice-to-haves. For most UK angel rounds, they are the reason the deal gets funded at all.
At the SEIS rate of 50% income tax relief, an investor putting in £100K effectively risks just £50K in after-tax terms (assuming they have sufficient income tax liability). Add loss relief if the company fails, and the worst-case net loss drops further. This changes the risk calculus fundamentally — angels can take larger positions in earlier-stage companies than they otherwise would.
For founders, SEIS/EIS is a fundraising tool as much as a tax scheme. Quoting “SEIS-eligible, advance assurance confirmed” in investor conversations signals professionalism and immediately unlocks a much larger pool of UK capital.
SEIS vs EIS: Side-by-Side
| Feature | SEIS | EIS |
|---|---|---|
| Income tax relief | 50% of amount invested | 30% of amount invested |
| Annual investment limit (investor) | £200,000 | £1,000,000 (£2M for knowledge-intensive) |
| Company gross assets limit | Under £350,000 before investment | Under £15,000,000 before investment |
| Company age limit | Within 3 years of first commercial sale | Within 7 years of first commercial sale |
| Max company raise | £250,000 lifetime SEIS | £12,000,000 (£20M knowledge-intensive) |
| CGT exemption on gains | 100% if held 3+ years | 100% if held 3+ years |
| CGT reinvestment relief (SEIS only) | 50% of CGT on disposal reinvested into SEIS | N/A |
| Loss relief | Losses can offset income tax (at marginal rate) | Same — losses reduce tax bill |
| IHT business property relief | 100% after 2 years | 100% after 2 years |
| Minimum holding period | 3 years | 3 years |
Eligibility: What Qualifies and What Doesn't
Company must
- ✓Be a UK-incorporated private limited company
- ✓Not be listed on a recognised stock exchange (AIM qualifies for EIS)
- ✓Not be a subsidiary of another company or controlled by another company
- ✓Carry out a qualifying trade (most tech, services, and manufacturing qualify)
- ✓Have a permanent establishment in the UK
- ✓Not be in financial difficulty at the time of investment
Trade must not be
- ✓Property development or dealing
- ✓Financial activities (banking, insurance, lending)
- ✓Legal or accountancy services
- ✓Farming or forestry
- ✓Running hotels, care homes, or nursing homes
- ✓Shipbuilding, steel, or coal production
Investor must
- ✓Not be an employee (for SEIS) or director at time of investment
- ✓Not own 30%+ of the company or its subsidiaries
- ✓Be UK-resident for tax purposes
- ✓Hold shares for the minimum 3-year period
- ✓Not receive value from the company outside the investment (e.g. connected loans)
The SEIS Investment Math: A Real Example
Imagine an investor in the 45% additional rate tax band invests £50,000 into a SEIS-qualifying startup.
| Amount invested | £50,000 |
| SEIS income tax relief (50%) | −£25,000 |
| Net cost after tax relief | £25,000 |
| If company fails: loss relief (45% of £25K) | −£11,250 |
| Worst-case net loss | £13,750 on a £50,000 investment |
| If company 10×es and held 3+ years | £500,000 gain — zero CGT |
The asymmetry is stark: capped downside, unlimited upside with no CGT. This is why SEIS eligibility is one of the most powerful tools in a UK founder's fundraising arsenal. An investor who understands the maths is far more likely to write a cheque.
How to Get Advance Assurance
Advance assurance is your green light from HMRC. Here's the process:
- Prepare your company summary — a brief description of the trade, financials, proposed raise, and intended use of funds.
- Complete the online application via HMRC's SEIS/EIS advance assurance portal. No fee. Attach articles of association, latest accounts, and a description of the trade.
- Wait 4–8 weeks. HMRC will ask clarifying questions if needed. Respond promptly.
- Receive your letter confirming provisional eligibility. Share this with investors. Note: this is not a guarantee — shares still need to be issued correctly and compliance certificates obtained afterwards.
- After issuing shares, apply for compliance certificates (SEIS 1 → SEIS 3, EIS 1 → EIS 3). These are what investors actually use to claim relief on their tax return.
Frequently Asked Questions
Can a founder invest in their own company under SEIS?
No. SEIS excludes individuals who are employees of the company. Directors can invest under EIS if they are unpaid or paid only a reasonable salary (not excessive), but this is a grey area and you should get HMRC advance assurance before accepting such investment. Founders should generally not invest in their own companies under SEIS/EIS — the schemes are designed to attract outside capital.
What is SEIS/EIS advance assurance and do I need it?
Advance assurance is a letter from HMRC confirming your company is likely to qualify for SEIS or EIS relief. It is not mandatory — you can raise without it — but most serious UK angels will not invest without it. The application is free and typically takes 4–8 weeks. You apply via HMRC's online portal with details of your company, its trade, and the proposed raise. Getting advance assurance before you start investor conversations is strongly recommended.
What happens if my company fails and investors lose money?
Loss relief is one of the most underappreciated benefits of SEIS/EIS. If the company fails and the shares become worthless, an investor can claim loss relief against their income tax. At the 45% additional rate, after combining SEIS income tax relief (50%) and loss relief on the remainder, an investor's maximum net loss on a failed SEIS investment is just 13.5p per £1 invested. This dramatically changes the risk profile for angels and is a major reason why SEIS investments get funded in the UK when equivalent deals in other countries do not.
Can I raise SEIS and EIS in the same round?
Yes — and this is common. Many UK startups raise £150K–£250K under SEIS first, then top up with EIS from larger investors. Because the SEIS lifetime cap is £250K, companies often structure their seed round as SEIS (up to £250K) + EIS (for the remainder). HMRC treats them as separate schemes, so you need separate applications and compliance certificates (SEIS 1/SEIS 3 and EIS 1/EIS 3).
When do investors actually receive the tax relief?
Investors claim SEIS/EIS relief through their self-assessment tax return for the year in which the shares were issued. Your company must first receive a compliance statement from HMRC (SEIS 3 or EIS 3), which you then send to investors. This process typically takes 6–18 months after the investment closes. The relief offsets the investor's income tax bill — it is not a cash payment. Investors can carry back relief to the previous tax year if beneficial.
Does raising at a high valuation affect SEIS/EIS eligibility?
Not directly. The SEIS/EIS rules do not cap your pre-money valuation. What matters is gross assets before the investment (under £350K for SEIS, under £15M for EIS). However, very high valuations relative to gross assets may attract HMRC scrutiny under the 'risk to capital' condition, which requires that the investment carries a genuine risk of loss. Structure your raise to be defensible and get advance assurance.
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