- SEIS gives individual investors 50% income tax relief on up to £200,000 invested per tax year, plus a capital gains exemption on qualifying shares held for at least three years.
- Your company can raise up to £250,000 under SEIS if it’s been trading for under three years, holds gross assets of £350,000 or less, and employs fewer than 25 people.
- Investors claim their relief using the SEIS3 certificate you issue after HMRC accepts your compliance statement, so advance assurance first makes fundraising far smoother.
SEIS tax relief is one of the most generous incentives the UK offers, giving individual investors 50% income tax relief on up to £200,000 invested per tax year in early-stage companies.
For a founder, that’s the difference between a cold pitch and a warm one. It means an angel putting in £10,000 gets £5,000 back off their tax bill, so their real risk is halved before your company has even proven itself.
Your business can raise up to £250,000 this way, provided it qualifies. Sleek’s SEIS/EIS advance assurance service confirms that eligibility with HMRC before you approach anyone.
What is SEIS and how does the relief work?
SEIS, the Seed Enterprise Investment Scheme, is a government programme that rewards people for backing young, high-risk UK companies by cutting their tax bill when they buy new shares.
The reliefs stack up across income tax, capital gains, and inheritance tax. Here’s what an investor can claim.
Relief | What it gives the investor |
Income tax relief | 50% of the amount invested, up to £200,000 per tax year |
CGT disposal relief | No Capital Gains Tax on profits when shares are sold, if held three years |
CGT reinvestment relief | 50% of a separate gain sheltered when reinvested into SEIS shares |
Loss relief | Any loss, minus relief already claimed, offset against income or gains |
Inheritance tax relief | Business Relief on shares held two years and owned at death |
Each of these has conditions, so it’s worth walking through the two that matter most to your investors first.
How does SEIS income tax relief work?
SEIS income tax relief lets an investor knock 50% of their investment straight off their income tax bill, capped at investments of £200,000 in a single tax year.
So someone investing the full £200,000 could reduce their tax bill by £100,000. They need enough income tax liability to absorb the relief, and they have to hold the shares for at least three years or the relief gets clawed back.
There’s a carry-back option too. An investor can treat some or all of the shares as though they were bought in the previous tax year, which can unlock relief against tax they’ve already paid.
What about capital gains and other reliefs?
The capital gains breaks are what turn a good SEIS pitch into a compelling one.
- CGT disposal relief: if an investor has claimed income tax relief and holds the shares for three years, any gain when they sell is completely free of Capital Gains Tax.
- CGT reinvestment relief: an investor can shelter 50% of a gain made elsewhere by reinvesting it into SEIS shares in the same tax year.
- Loss relief: if the company fails, the investor offsets the loss, less the income tax relief already taken, against their income or gains. For an additional-rate taxpayer, that can cut the effective loss on £1 to around 15.5p.
- Inheritance tax relief: shares usually qualify for Business Relief once held for two years, so they can pass free of inheritance tax if still owned at death.
The EIS tax relief scheme works on similar principles but at a 30% rate for larger, more established companies. Most founders raise under SEIS first, then move to EIS.
Is my company eligible for SEIS?
Your company qualifies for SEIS if it’s a young, small UK trading company that hasn’t yet taken EIS or VCT money.
HMRC sets firm limits, and missing any one of them disqualifies the whole raise. Here are the company conditions.
Condition | The limit |
Trading history | Less than three years old |
Gross assets | £350,000 or less, immediately before the share issue |
Employees | Fewer than 25 full-time equivalents |
Lifetime SEIS raise | £250,000 maximum in total |
Establishment | A permanent establishment in the UK |
Prior funding | No previous EIS or VCT investment |
Gross assets means everything on your balance sheet before deducting liabilities, so cash, equipment, and intellectual property all count. Your trade also has to be a qualifying one, which rules out activities like property development and most financial services.
Issue your SEIS shares before any EIS or VCT round. The order is fixed, and once you've taken EIS or VCT money, SEIS is off the table for good.
Who can claim SEIS relief and what are the limits?
An individual UK taxpayer can claim SEIS relief, but they have to be genuinely independent of your company.
The £200,000 annual cap applies per investor, per tax year. Beyond that limit, the connection rules are where deals most often come unstuck, so it’s worth knowing them before you take anyone’s money.
Investors are blocked from claiming if they’re “connected” to the company, which HMRC defines broadly:
- They hold more than 30% of the company’s shares, voting rights, or assets.
- They’re an employee (though directors can invest, unlike under EIS).
- They’re a business partner or an associate of someone connected, such as a close relative.
The shares themselves have to be new, full-risk ordinary shares, paid up in full in cash, with no special rights to your assets on a winding up. Getting the share class wrong is a common and avoidable trip-up, which is why the SEIS and EIS common pitfalls are worth reading before you draft anything.
What is advance assurance and why does it matter?
Advance assurance is HMRC’s provisional confirmation that your company looks eligible for SEIS, given before you raise a penny.
It isn’t legally required. In practice, though, most serious investors expect it, because it tells them their tax relief is very likely to be approved. Without it, you’re asking someone to trust that the relief will materialise, which is a much harder sell.
How do I get advance assurance?
You apply to HMRC with details of your company, its trade, the shares you plan to issue, and ideally a prospective investor or two named on the application.
The process takes a few weeks and hinges on getting the paperwork right first time. Our guide on applying for SEIS advance assurance walks through exactly what HMRC wants to see.
Once you’ve raised the money and issued the shares, the compliance obligations don’t stop. Staying on top of SEIS and EIS compliance after funding is what keeps your investors’ relief safe for the full three-year holding period.
How do investors claim SEIS relief?
Investors claim SEIS relief using the SEIS3 certificate, which you as the company issue to them after HMRC accepts your compliance statement.
The sequence runs in a set order, and your investors can’t claim anything until you’ve completed your side. Here’s how it flows.
- You raise the money and issue the SEIS shares.
- You wait until the company has been trading for four months, or has spent 70% of the funds.
- You submit form SEIS1 (the compliance statement) to HMRC.
- HMRC approves it and sends you SEIS3 certificates.
- You pass a SEIS3 to each investor.
- Each investor claims the relief through their Self Assessment tax return, using the details on their SEIS3.
Investors can claim once they hold a valid SEIS3, and they can go back and amend a return to claim carry-back relief for the previous year. The same certificate-driven process applies when claiming EIS tax relief, so founders who use both schemes will recognise the pattern.
If your investors are weighing SEIS against other routes, it’s worth them understanding how it sits alongside share-based rewards generally, which our overview of the advantages of share capital covers, and how it differs from pooled vehicles like Venture Capital Trusts.
How Sleek helps with SEIS
SEIS can transform a fundraise, but only if the eligibility, share structure, and compliance are all right from day one. One wrong share class or a missed limit can cost your investors their relief and cost you the round.
Sleek handles the whole path, from confirming your eligibility and securing advance assurance to filing your compliance statement and issuing SEIS3 certificates. That means you pitch with confidence, and your investors get the relief they were promised.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
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FAQs on SEIS tax relief
Can a director claim SEIS relief on their own company?
Yes. Directors can invest in their own company under SEIS and claim the relief, which isn’t allowed under EIS. The catch is the connection rules: a director must not hold more than 30% of the company’s shares, voting rights, or assets, either alone or with associates. Paid employees who aren’t directors are blocked from claiming entirely.
Can I use SEIS and EIS in the same funding round?
No, not in the same accounting period. SEIS shares must always be issued before any EIS or VCT shares. Most founders raise their first £250,000 under SEIS, then switch to EIS for larger rounds once the company has grown. Get the order wrong and you lose access to SEIS permanently, so plan the sequence carefully.
How long does it take to get SEIS3 certificates from HMRC?
You can only apply once the company has traded for four months or spent 70% of the money raised. After you submit the SEIS1 compliance statement, HMRC typically takes several weeks to process it before issuing your SEIS3 certificates. Delays are common if the paperwork is incomplete, so accuracy on first submission saves everyone weeks of waiting.
What happens to SEIS relief if my company fails?
Investors keep their income tax relief as long as they held the shares for the full three years and the company kept qualifying. On top of that, loss relief lets them offset the capital loss, minus the income tax relief already claimed, against their income or gains. That safety net is a big part of what makes SEIS attractive to angels.
Does SEIS relief get clawed back?
Yes, in certain cases. If an investor sells the shares within three years, or the company stops meeting the qualifying conditions during that window, HMRC can withdraw the income tax relief. The same applies if an investor becomes connected to the company. Keeping the company compliant for the full holding period protects everyone’s relief.
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What can my company spend SEIS money on?
The funds must go towards a qualifying trade, research and development, or preparing to trade, and they must be spent within three years of the share issue. Typical uses include hiring, product development, marketing, and equipment. Spending it on excluded activities, or failing to spend it in time, puts your investors’ relief at risk.
Is advance assurance the same as approval for SEIS relief?
No. Advance assurance is HMRC’s provisional view that your company looks eligible before you raise money. It isn’t a guarantee, and it doesn’t grant any relief. Actual relief only comes later, once you’ve raised the funds, filed your SEIS1 compliance statement, and issued SEIS3 certificates to your investors.
