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Seed Enterprise Investment Scheme

The Seed Enterprise Investment Scheme (SEIS) is designed to encourage investment in very early-stage companies by offering the most generous tax reliefs of any UK venture capital scheme. For the 2025/26 tax year, SEIS offers 50% income tax relief on investments of up to £200,000 per individual. This means a £20,000 SEIS investment reduces your Income Tax bill by £10,000. SEIS targets companies that are truly at the seed stage — they must be under two years old and have fewer than 25 employees. The risk is correspondingly high, and tax reliefs should be viewed as compensation for that risk.

Income Tax Relief

Income tax relief is available at 50% of the amount subscribed for SEIS qualifying shares. The maximum annual investment is £200,000, meaning the maximum tax reduction is £100,000. The relief cannot exceed your total Income Tax liability for the tax year (but can be carried back to the previous year). To retain relief, you must hold the shares for at least three years. If you dispose of the shares within three years, the relief is withdrawn (subject to certain exceptions such as the company failing, where loss relief may be available instead). The shares must be newly subscribed, and the company must not have been previously funded under SEIS (the total SEIS limit per company is £250,000).

CGT Reinvestment Relief

SEIS offers a capital gains reinvestment relief, sometimes called "SEIS CGT reinvestment relief" or simply "SEIS CGT relief." If you realise a capital gain in the same tax year and reinvest part or all of that gain into SEIS qualifying shares, 50% of the reinvested amount is exempt from CGT. For example, if you realise a capital gain of £40,000 and reinvest £30,000 into SEIS shares, £15,000 of the gain is exempt from CGT. The remaining gain is taxed in the normal way. This relief is in addition to the 50% income tax relief on the SEIS investment itself, making SEIS extremely tax-efficient for investors who also have capital gains to manage. The reinvestment must occur within one year before or three years after the gain arose.

CGT Disposal Exemption

SEIS shares that are held for at least three years are exempt from Capital Gains Tax on disposal. This is a full exemption — any increase in value is tax-free. If the shares are sold at a loss, you can claim loss relief. The loss is computed net of the income tax relief already received. For example, if you invested £10,000, received £5,000 income tax relief (50%), and the shares become worthless, your allowable loss is £5,000 (the net cost). This loss can be set against your income (at your marginal rate) or against capital gains. Loss relief is particularly valuable for additional-rate taxpayers who can recover 45% of the loss through reduced Income Tax.

Qualifying Companies

To qualify for SEIS, the company must: be incorporated in the UK, carry on a qualifying trade (excluded trades include property development, financial services, legal services, farming, and coal/steel production), have fewer than 25 full-time employees, have gross assets of no more than £350,000 at the time of the share issue, be less than two years old at the time of the first SEIS share issue, and have not previously raised more than £250,000 under SEIS. The company cannot be controlled by another company (no corporate ownership of more than 50%), and it must not have been funded under EIS or VCT before the SEIS issue. The company's trading must also be carried on wholly or mainly in the UK.

Annual Limits

The annual limits under SEIS are: individual investor: £200,000 investment per tax year (with maximum income tax relief of £100,000), maximum CGT reinvestment relief: 50% of reinvested gains, company limit: £250,000 total SEIS fundraising (across all investors), and lifetime limit per investor: cumulative SEIS investments cannot exceed £200,000 per tax year (there is no overall lifetime limit, but the per-year cap restricts how much you can invest). The £250,000 company limit means that a company can only raise £250,000 under SEIS in total, after which it may graduate to EIS for larger fundraising rounds. The limit applies to the company's lifetime.

How to Invest in SEIS

SEIS investments are typically made through equity crowdfunding platforms (Seedrs, Crowdcube), angel investment networks, or specialist SEIS fund managers who pool investments across multiple qualifying companies. Many SEIS funds offer a portfolio approach, spreading your £200,000 across 10–20 companies to reduce the risk of total loss. Before investing, ensure the company has obtained HMRC advance assurance for its SEIS share issue. The company applies for advance assurance online, and HMRC confirms that the proposed share issue appears to meet the qualifying conditions. You will receive a SEIS compliance certificate (form SEIS3) from the company after the investment, which you need to claim your relief on your Self Assessment tax return.

Carry Back of SEIS Relief

SEIS income tax relief can be carried back to the previous tax year, subject to the £200,000 annual limit for that earlier year. For example, if you invest £50,000 in SEIS shares in June 2025, you can elect to treat the investment as made in the 2024/25 tax year, provided you had sufficient Income Tax liability in 2024/25 and did not already use your full SEIS allowance in that year. This is useful if you have a higher Income Tax bill in the previous year. The carry-back election must be made in your Self Assessment return for the year in which the investment is made (2025/26). You cannot carry back more than £200,000 in total to a single tax year.