SEIS is the UK government's most generous investment tax relief programme. Fifty per cent income tax relief. Zero CGT on profits. Loss relief that limits your downside to 27.5p in the pound for a 45% taxpayer. CGT reinvestment relief on top of that. And IHT exemption after two years.
It exists because seed-stage companies are genuinely high risk. Most fail. The government wants private capital backing the next generation of British startups, and it has priced the incentive accordingly.
This is the complete guide to how SEIS works.
SEIS at a glance — 2026
Income tax relief
50% of amount invested
Annual investor limit
£200,000
CGT on gains after 3 years
0%
CGT reinvestment relief
50% of reinvested gain
Maximum effective loss (45% taxpayer)
~27.5p in the pound
IHT Business Relief
100% after 2 years
What is SEIS?
SEIS stands for Seed Enterprise Investment Scheme. Introduced in 2012, it is the earlier-stage counterpart to EIS — the Enterprise Investment Scheme. Where EIS covers a wide range of growing private companies, SEIS targets the very beginning: pre-revenue or early-revenue startups, fewer than 25 employees, less than three years from their first commercial sale.
The government offers 50% income tax relief — significantly higher than EIS's 30% — because the underlying investments are significantly riskier. A company with no revenue and 10 employees is more likely to fail than a Series A company with £2 million of ARR. The SEIS relief structure acknowledges that.
In 2023/24, HMRC received over 2,700 SEIS advance assurance applications. The scheme is actively used across the UK's startup ecosystem, with London and the South East accounting for the largest share of investment but strong activity across Bristol, Manchester, Edinburgh, and the university clusters.
The five SEIS tax reliefs
1. Income tax relief — 50%
Invest £10,000 in a qualifying SEIS company and you reduce your income tax bill by £5,000. Invest the maximum £200,000 in a tax year and you save £100,000.
Claimed through Self Assessment — in the current tax year or carried back to the prior year. You need sufficient income tax liability to claim the full relief. If your income tax bill is £30,000 and you invest £100,000 in SEIS, you can claim £30,000 of relief — not the full £50,000. The unclaimed relief is not refunded.
2. Capital gains tax exemption
Hold SEIS shares for at least three years and any gain on a successful exit is completely free of CGT. At the current 24% CGT rate for higher-rate taxpayers, that is a meaningful uplift on top of the income tax relief.
3. Loss relief
This is what makes SEIS different from ordinary high-risk investing.
If the company fails: deduct the 50% income tax relief already received from the original investment to arrive at the net loss. Then claim loss relief on that net loss at your marginal income tax rate.
Worked example for a 45% taxpayer:
- Investment: £10,000
- SEIS income tax relief received: £5,000
- Net loss on failure: £5,000
- Loss relief at 45%: £2,250
- Total tax recovered: £7,250
- Maximum effective loss: £2,750 — or 27.5p in the pound
For a 40% taxpayer the effective loss is slightly higher. For a 45% taxpayer investing the maximum £200,000, a complete failure of every investment would result in a maximum loss of £55,000 after all reliefs — on an original £200,000 outlay.
That is not nothing. But it is a very different risk profile from losing £200,000 with no relief at all.
4. CGT reinvestment relief
If you have a capital gain from another disposal — a property sale, a share sale, a business exit — you can invest that gain into SEIS and reduce the CGT liability on it by 50%.
Invest £50,000 of capital gains into SEIS and £25,000 of that gain is exempt from CGT. This stacks on top of the 50% income tax relief. You are simultaneously reducing CGT on an existing gain and receiving income tax relief on the same investment.
5. Inheritance tax relief
SEIS shares held for at least two years qualify for Business Property Relief at 100%. They fall outside your estate for IHT purposes entirely. With IHT at 40%, this is a useful long-term benefit for investors with estate planning in mind.
Who can invest in SEIS?
UK taxpayers only. Main conditions:
- No connection — not an employee (with limited director exceptions), not holding more than 30% of shares
- Three-year hold — sell before three years and you lose the reliefs
- Own money — not through pension or ISA
- Sufficient tax liability — you need income tax or CGT to claim against
Unlike EIS, SEIS does not universally require self-certification as a high net worth or sophisticated investor for every route to market. However, most SEIS opportunities offered to individual investors do require it — and any adviser assessing your suitability will want to understand your overall investment profile.
What companies qualify for SEIS?
SEIS qualifying companies must meet strict HMRC criteria. At the time of investment:
- Under 3 years from first commercial sale
- Fewer than 25 full-time employees
- Gross assets under £350,000 before the investment
- No more than £250,000 raised through SEIS in total
- Qualifying trade — financial services, property development and certain other sectors excluded
- UK-incorporated, UK-trading
- Not listed on any recognised exchange
Most companies applying to investors have already obtained HMRC Advance Assurance — pre-clearance that the investment qualifies. If they haven't, ask why.
SEIS investment limits — 2026
The limits were increased in April 2023 and remain in place:
- Investor annual limit: £200,000 per tax year (up from £100,000)
- Company lifetime limit: £250,000 total SEIS raised (up from £150,000)
No minimum set by HMRC — individual companies and platforms set their own minimums, typically £500–£5,000.
The risks — no relief changes the fundamentals
SEIS investing is high risk. The reliefs are generous because the failure rate is high.
Most early-stage companies fail. Studies consistently show that the majority of seed-stage companies do not return investors' capital. The tax reliefs reduce your effective loss, but they do not eliminate it.
Illiquidity — seed-stage companies have no liquid market for their shares. Your capital is locked up. A realistic horizon is five years minimum. Often longer. Sometimes indefinitely.
Total loss — 27.5p in the pound is still a loss. Across a diversified SEIS portfolio, the expectation is that some companies fail. The ones that succeed need to make up for those losses and more.
Dilution — a 5% seed stake can become 1% by Series B as the company raises further rounds. Your return on a successful exit depends on the price paid relative to the exit valuation — dilution affects that calculation significantly.
Tax relief clawback — HMRC can reclaim SEIS relief if the company breaks qualifying conditions within three years of investment.
No dividends — seed companies do not pay dividends. Return is entirely exit-dependent.
How to make a SEIS investment
Direct investment through a platform (Seedrs, Crowdcube), a syndicate, or directly with founders. You choose the company. You do your own due diligence. Higher potential returns, higher concentration risk.
SEIS fund — a manager deploys capital across a portfolio of qualifying companies. Professional deal selection, diversification, management fees.
Specialist SEIS manager — curated deal flow for high net worth and sophisticated investors. More hands-on than a fund, more selective than a platform.
How to claim SEIS tax relief
After investing, the company issues a SEIS3 certificate confirming the investment qualifies. Use this to claim relief on Self Assessment — current year or prior year carry-back. If you do not normally file Self Assessment, HMRC has a process for claiming SEIS relief directly.