Seed Enterprise Investment Scheme (SEIS)
Invest in high-growth, early-stage UK startups and receive up to 50% income tax relief, tax-free growth, and downside protection.
Invest in high-growth, early-stage UK startups and receive up to 50% income tax relief, tax-free growth, and downside protection.
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SEIS incentivises investment in early-stage UK startups by offering 50% income tax relief to sophisticated investors.
You can invest up to £200,000 per tax year in a singular SEIS qualifying company that are:
1) 50% Income Tax Relief: You can claim 50% income tax relief on investments up to £200,000 per tax year.
2) Tax-Free Growth: If you hold your SEIS shares for at least three years, any profit you make on their sale is free from Capital Gains Tax (CGT).
3) Downside Protection: If a company fails, the government shares the loss and you can offset the loss against your income tax bill.
4) Inheritance Tax (IHT) Free: Once you have held SEIS shares for two years, they are usually 100% exempt from Inheritance Tax.
SEIS is a high-risk investment designed for experienced investors who are comfortable with significant volatility. It is typically suitable for:
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Read Imogen’s case studyWhile the tax reliefs are generous, we never let the ‘tax tail wag the investment dog’. We view SEIS as a sophisticated satellite component of a broader financial plan, not a standalone gamble.
We first stress-test your financial plan to ensure you have sufficient liquidity in safer assets (like pensions and ISAs) before allocating capital to high-risk ventures.
Rather than betting on a single startup, we typically recommend investing through managed SEIS portfolios. This spreads your risk across multiple sectors.
We identify specific “tax friction” points in your life – such as a recent business sale or a high-income year – and use SEIS surgically to reduce those liabilities while targeting growth.
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Ask a questionThe Seed Enterprise Investment Scheme (SEIS) is a UK government program which helps startups raise capital from private investors. SEIS offers tax benefits to investors of up to 50%, making it an attractive option.
Companies which carry out research and development that will lead to a qualifying trade are eligible for SEIS/EIS.
For Knowledge Intensive Companies (KICs), the rules differ slightly to a standard SEIS.
KICs still need a permanent UK establishment and should not be trading on the stock exchange to qualify. To qualify, they must also allocate at least 10% of expenditure to research and development over the last 3 years.
Those who invest in SEIS are experienced, wealthy, and often sophisticated investors. They may be more attractive to those who have a sizeable income tax bill.
The SEIS investments should sit within a diversified portfolio.
It is important to remember, however, that investing is specific to the individual investor.
SEIS targets small and early-stage startups. These are more likely to fail than larger, more established, companies. Making SEIS investments can therefore carry risk of losing the entire value of your investment.
This is where SEIS tax relief comes into play. These available reliefs are:
Perhaps the most advantageous is loss relief due to the increased risk of loss when you invest in SEIS.
To receive the tax relief benefits of SEIS investments, you must:
If you have not held the investment for three years, or the company loses their qualifying status, you may be required to pay back the Income Tax relief received.
You will normally claim tax relief when completing your tax return.
You can get an idea of your potential tax relief if you multiply the amount invested into the SEIS by 50%. If investing via a fund, subtract the upfront fund fees from the amount.
But you should always speak to a professional tax planner, accountant, or financial planner.
This is the amount you can claim as a reduction on your income tax bill.
For example, if you invested £1000 into an eligible company you would be able to claim £500 in income tax relief.
If that company were to fail, you may claim further loss relief.
Though SEIS and EIS investments can seem similar, they have one key difference: while SEIS exclusively targets startups and early-stage businesses, EIS can be used by larger companies. For an EIS, these larger companies may be more established with up to seven years trading history and two hundred and fifty employees.
There are also differences in available tax reliefs: SEIS offers 50% Income Tax Relief, while EIS offers 30%.
A VCT gives investors exposure to a sector of smaller, VCT-qualifying companies who are not listed on the London Stock Exchange but have the potential to grow faster than larger, listed companies. Like EIS investments, VCT investors benefit from 30% income tax relief. This only applies, however, where the share has been held for at least five years. If your VCT pays dividends, they will be tax-free too.
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