It's one of the most common questions an angel asks the moment a board seat is on the table: if I take a directorship, do I lose the tax relief? The honest answer is "it depends, and the schemes don't agree with each other." SEIS is relaxed about directors. EIS treats them with suspicion. And the rule that quietly catches the most people - founders especially - isn't about the title at all.
Both schemes are built to reward outside money taking a risk on a young company, not to subsidise the people who already control it. That single design intention explains almost every rule below. Once you see it that way, the exceptions stop looking arbitrary.
The schemes reward outside risk, not inside control. Every director rule follows from that.
Can a company director claim SEIS?
Yes. SEIS, the Seed Enterprise Investment Scheme, was deliberately written to let directors in. You can be a director of the company you're backing - paid or unpaid - and still claim 50% income tax relief on your investment, up to £200,000 per tax year, with the usual SEIS package alongside it: a three-year minimum hold, a capital gains exemption on the shares if you hold them three years or more and received the income tax relief, loss relief if it goes wrong, and the option to carry the relief back to the previous tax year.
This is genuinely useful, because at the seed stage the founder and the first cheque-writer are often the same handful of people. SEIS was designed to back exactly that situation - the company is usually trading for less than three years, has fewer than 25 full-time-equivalent staff, and gross assets under £350,000, and can raise up to £250,000 in total under the scheme. A working director putting their own money in is normal here, not a problem.
The condition that does bite is the one nobody asks about: the 30% shareholding limit, which we come to below.
Can a company director claim EIS?
Here it tightens. Under EIS, the Enterprise Investment Scheme, a director is treated as a connected person, and the basic rule is that connected people cannot claim relief. So the default answer for an EIS director is no - but there are two well-worn ways through, and most angels who sit on boards rely on one of them.
The unpaid-director route
An unpaid director can claim EIS relief. The point of "unpaid" is that you take no remuneration from the company - no salary, no fees. Limited, genuine expenses reimbursed for doing the job don't count against you, but anything that looks like payment for services does. Stay unpaid and you can claim EIS's 30% income tax relief on up to £1,000,000 a year (or £2,000,000 if at least £1,000,000 goes into knowledge-intensive companies), with the same three-year hold, capital gains exemption, loss relief and carry-back EIS offers. Start drawing a director's salary and this route closes.
The business-angel route
The second exception is built for exactly the reader of this newsletter. The business-angel rule lets someone who was not previously connected with the company invest under EIS first, and then become a paid director afterwards, without losing relief on that investment. The sequence is the whole game: the money has to go in before, or at the same time as, you join the board, and you must not have been a director or employee of the company before you invested. Get the order wrong and you're a connected person who happens to have written a cheque.
The 30% rule that catches everyone
This is the test that does the real work, and it applies to both schemes. You're treated as connected with the company - and therefore barred from relief - if you control more than 30% of any of three things: the ordinary share capital, the voting rights, or the assets that would be distributed if the company were wound up. Whichever you breach, the relief is lost on the whole investment, not just the slice above 30%.
And it isn't only your own holding that counts. The holdings of your associates are added to yours: a spouse or civil partner, your business partners, and certain relatives - parents, grandparents, children and grandchildren. Curiously, brothers and sisters don't count as associates for this purpose, which surprises people every time. The arithmetic is done on the combined figure, so a couple who each hold 20% are both over the line.
This is why the director question and the founder question pull apart. A first-time angel taking a small stake and a board seat is usually nowhere near 30%. A founder-director sitting on half the cap table is comfortably past it - and no amount of being "unpaid" rescues a holding that's simply too big.
Why founders usually miss out
Put the two rules together and you can see why founder relief is the exception, not the norm. SEIS allows directors, so a founder clears the first hurdle - but most founders own far more than 30% of their own company, so the connection test stops them anyway. EIS is harder still: founders tend to be paid directors who were connected with the business from the day it was incorporated, so neither the unpaid-director route nor the business-angel route fits. The business-angel rule in particular requires that you weren't involved before investing, which is the one thing a founder can never claim.
There are narrow cases where a founder takes a modest stake, stays unpaid early on, and qualifies for SEIS - but they're the exception, and the precise figures and timing need checking against HMRC guidance and a tax adviser before any shares are issued. The cost of getting it wrong is the relief disappearing for every investor relying on the same issue.
The company still has to qualify too
None of the director rules matter if the company itself doesn't meet the scheme conditions - and the EIS company-side limits are larger, more numerous and more prone to change than SEIS's. They cover the company's gross assets, its age since first commercial sale, its employee count, and the annual and lifetime amounts it can raise across all the venture capital schemes, with separate, more generous figures for knowledge-intensive companies. Several of these were increased from 6 April 2026. Because the numbers move, check the live figures in HMRC's guidance rather than trusting a remembered one: gov.uk venture capital schemes (EIS). The investor-side conditions, including the connection and director rules, are set out in HMRC's tax relief for investors guidance.
The plumbing is the same either way
Whether you qualify as a director under SEIS or through one of the EIS exceptions, the mechanics don't change. The company should secure advance assurance from HMRC before the round - a pre-check that the business and the proposed investment look eligible - and then, after the shares are issued and the conditions met, it issues an SEIS3 or EIS3 certificate. That certificate is what you use to claim the relief on your tax return. No certificate, no claim, no matter how cleanly you fit the director rules. You'll generally need to be a UK taxpayer for any of it to be worth anything.
A line worth stating plainly, because the director angle tempts people into clever structuring: none of this is a recommendation to invest, to take a board seat, or to arrange your affairs a particular way. It's an explanation of how the rules work. The reliefs depend on your personal tax position and on legislation that shifts with each Budget, and the connection rules in particular are unforgiving when the order of events is wrong. This is general information, not financial or investment advice - take FCA-regulated advice before you commit capital or accept a directorship tied to a round.
Frequently asked questions
Can a company director claim SEIS relief?
Yes. SEIS specifically allows directors to claim 50% income tax relief on their investment, up to £200,000 per tax year, and being a director - paid or unpaid - does not by itself block the relief. The catch is the shareholding limit: to qualify, you must not hold more than 30% of the company's shares, voting rights or assets on winding up, counting the holdings of your associates such as a spouse, business partner and certain relatives. A founder-director who already owns a large stake is usually over that line.
Can a company director claim EIS relief?
Sometimes. The starting position under EIS is that a director is a connected person and connected people cannot claim relief. There are two main exceptions. An unpaid director - one who receives no remuneration from the company - can claim, provided they meet the other conditions. And the business-angel rule lets someone who was not previously connected with the company invest under EIS and then become a paid director afterwards, keeping the relief on that investment. The 30% shareholding limit applies under EIS too.
What is the 30% rule for directors and SEIS or EIS?
Under both schemes, an investor is treated as connected with the company - and so cannot claim relief - if they control more than 30% of the ordinary share capital, the voting rights, or the assets on a winding up. Your associates' holdings count towards your total, including a spouse or civil partner, business partners, and certain relatives such as parents and children, though not brothers and sisters. Cross the 30% line and the relief is lost on the whole investment, not just the excess.
Can a founder claim SEIS or EIS on their own company?
A founder can claim SEIS in principle, because SEIS permits directors, but most founders hold more than 30% of their company and so fail the connection test. EIS is harder still, because founders are usually paid directors who were connected from the start, so the unpaid-director and business-angel exceptions rarely fit. In practice, founder relief is the exception rather than the rule, and the figures should be checked against HMRC guidance and an adviser before a share issue.
Does taking a director's salary affect EIS relief?
It can. Under EIS the unpaid-director route depends on the director receiving no disqualifying payment - broadly, no remuneration beyond limited reimbursed expenses. Start drawing a salary and that route closes. The business-angel exception is the way paid directors usually keep EIS relief: the investment must come before, or at the same time as, becoming a director, and the person must not have been connected with the company beforehand. This is general information, not financial advice.