Earn tax benefits by investing in UK early-stage start-up businesses

Seed Enterprise Investment Scheme (SEIS)

What is a Seed Enterprise Investment Scheme?

The Seed Enterprise Investment Scheme (SEIS) was designed to boost UK economic growth by promoting new enterprise. Alongside the Enterprise Investment Scheme (EIS), and Venture Capital Trust (VCT), SEIS is a Venture Capital Scheme (VCS).  

When making a SEIS investment, you may invest directly in a singular SEIS-qualifying company or through a fund or portfolio. 

Suitable for experienced and sophisticated investors, the amount you can invest in a SEIS is a maximum of £200,000 per tax year and a minimum of around £10,000. The minimum amount may vary, however, depending on the fund. 

For a company to qualify as a SEIS, it must be less than three years old, have less than twenty-five employees, gross assets worth less than £350,000, and receive funding through SEIS of no more than £250,000.


What are the benefits?

Investors receive up to 50% Income Tax Relief each tax year. To claim this relief, you need to meet eligibility requirements. For instance, you must hold the shares for at least three years. Investments in SEIS-qualifying companies also offer 100% Inheritance Tax relief, so long as the investment has been held for at least two years at the time of death. 

Woman reviews her Seed Enterprise Investment Scheme

What are the potential risks?

SEIS investments can be unpredictable as you buy shares in early-stage businesses, with their value often rising and falling more often than larger, more established companies. They can therefore be more suited to investors comfortable with high risk. 

It is also important to note that tax relief is never guaranteed. And, investments may need to be held much longer than the minimum EIS holding period of three years.

Before making an investment, it is important that you discuss these risks with a Certified Financial Planner.

How do we plan for SEIS?

SEIS is certainly a big part of what makes early-stage investing so appealing to investors.  

For family and friends of the entrepreneurs, who might be keen to help fund their start-up, the SEIS could be a rewarding option – if they meet the government criteria, it can provide a tax-efficient vehicle, offering relief of 50% on income tax and further relief on Capital Gains Tax (CGT) 

Beyond the tax benefits, however, they are increasingly being viewed as valid investment options. This is because investing in a portfolio of SEIS companies affords you some diversification, usually within an area or sector. It also gives you comfort as a professional manager is researching the opportunities and making the investment decisions for you. 

Given the tax breaks, First Wealth often recommend SEIS for business owners with substantial income who are looking for ways to reduce their tax burden. SEIS also remains a viable option for those with large CGT liabilities.

Talk to an adviser

Questions we get asked a lot

SEIS-qualifying companies must meet the following criteria: 

  • Be less than three years old 
  • Have fewer than 25 employees  
  • Have gross assets of less than £350,000  
  • Receive no more than £250,000 in funding through the SEIS 

Similar to EIS, some companies and sectors are excluded from SEIS. This list of exclusions is long but leaves huge scope for investment. Most recently, SEIS has been popular among qualifying app development, and music and film production companies.  

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: 

  1. Initial tax relief of 50% on investments up to £100,000 
  2. Capital Gains Tax exemption on SEIS share gains 
  3. Loss relief where the loss is set against any income tax of that year or the previous year  
  4. Capital Gains Tax reinvestment relief on 50% of capital gains if it is reinvested in a SEIS-qualifying company 

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: 

  • Hold the investment for at least three years  
  • The company you invest in must retain their SEIS-qualifying status.  

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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