Hand £20,000 to a two-year-old company that qualifies for SEIS, and the state will give you up to £10,000 of it straight back as a cut to your income tax bill. That is the headline, and it's why the scheme looms so large in any UK angel's thinking. No other early-stage relief refunds half your cheque on the way in.
The Seed Enterprise Investment Scheme - SEIS for short - has been running since 2012 to push private money toward the companies that struggle most to raise it: the ones that are barely more than a founder, an idea and a Companies House registration. The generosity is the lure. The conditions are the catch. Both deserve a careful look.
What is SEIS, in one line?
SEIS is a tax-relief scheme that rewards individuals for buying new shares in small, young UK trading companies. In return for taking on that risk, you get a stack of tax reliefs - income tax relief up front, capital gains breaks later, and a cushion if the whole thing goes under. It sits one rung below its bigger sibling, EIS, on the same ladder of government incentives.
How does the 50% income tax relief work?
This is the centrepiece. You can claim 50% income tax relief on the amount you invest in qualifying SEIS shares, up to a maximum of £200,000 in a single tax year. Put in £200,000 and, in principle, you reduce your income tax bill by £100,000.
One thing trips people up: the relief reduces tax you owe, it doesn't hand you a cash rebate out of thin air. You need to have at least that much income tax liability for the year to use it all. If you don't, you can carry the relief back to the previous tax year and set it against that year's bill instead - useful if this year's tax is light. These figures come from HMRC's investor guidance on gov.uk.
What about capital gains and losses?
The income tax relief is only the first layer. SEIS stacks two more on top.
Hold your shares for the minimum three years and any gain you make when you eventually sell them is exempt from capital gains tax, provided you received the income tax relief and still qualify. There's also a separate reinvestment relief: if you have a capital gain from selling something else and roll it into SEIS shares, you can exempt 50% of that gain, on up to £100,000 of investment a year. It's a way of washing an existing tax bill through a new seed investment.
And if the company fails - which, at this stage, plenty do - SEIS offers loss relief. You can set the loss, after stripping out the income tax relief you already banked, against your income or other gains. Add the reliefs together and the effective downside on a failed SEIS investment is far smaller than the cash you put in. That, bluntly, is the whole design: the Treasury absorbs a chunk of the risk so the money flows.
The reliefs soften the loss. They don't make the company any more likely to succeed.
Which companies actually qualify?
Here's where the scheme earns its "seed" name. The reliefs are reserved for companies that are unmistakably early, and the tests are strict. To issue SEIS shares, a company must broadly be:
- Trading for less than three years - SEIS is for the very start of the journey.
- Small on headcount - fewer than 25 full-time-equivalent employees.
- Light on assets - gross assets under £350,000 at the point the shares are issued.
- Capped on what it can raise - a company can take in no more than £250,000 in total under SEIS across its lifetime.
Cross any of those lines and the company moves out of SEIS territory - which is usually the point at which EIS takes over. The detailed conditions, and the trades that are excluded, are set out in HMRC's SEIS guidance on gov.uk.
How is SEIS different from EIS?
People muddle the two constantly, so it's worth drawing the line clearly. SEIS and EIS are siblings on the same ladder, but they sit at different rungs.
SEIS is for the youngest, smallest companies and is the more generous: 50% income tax relief, on up to £200,000 a year. EIS picks up for firms that have outgrown the seed thresholds. It offers 30% income tax relief, on up to £1,000,000 per tax year - or £2,000,000 where at least £1,000,000 goes into knowledge-intensive companies (research-heavy firms meeting HMRC's tests). Both schemes share the three-year minimum hold, the capital gains exemption on the shares, loss relief and carry-back to the prior year. EIS adds a capital gains deferral relief that SEIS doesn't have.
On the company side, EIS allows far larger businesses - broadly, gross assets up to £30 million, fewer than 250 employees, and within seven years of a first commercial sale, with much higher annual and lifetime raise caps than SEIS. Those company-side limits were adjusted for 2026, so check the current figures in HMRC's EIS guidance on gov.uk rather than relying on memory for a specific deal. In many rounds you'll see both used together: the first slice of a raise under SEIS, the rest under EIS once the seed cap is full.
How do you actually claim SEIS relief?
The plumbing matters, because get it wrong and the relief evaporates. Before the money goes in, the company should obtain HMRC advance assurance - a pre-investment sign-off that the round is expected to qualify. It isn't strictly mandatory, but any serious angel will ask to see it before committing.
Once you've invested and the shares are issued, the company sends you an SEIS3 certificate. That document is your key: you use it to claim the relief, either through your Self Assessment tax return or by writing to HMRC. You'll generally need to be a UK taxpayer for any of it to be worth having - the reliefs offset UK tax, so without a UK tax bill there's little to relieve.
Frequently asked questions
How much SEIS tax relief can I get?
SEIS gives 50% income tax relief on the amount you invest, up to £200,000 per tax year. So a £20,000 investment can cut your income tax bill by up to £10,000, provided you have at least that much tax to relieve. You can also carry the relief back to the previous tax year. Figures are from gov.uk.
What is the difference between SEIS and EIS?
Both are UK government tax-relief schemes for backing early-stage shares, but SEIS targets the very youngest companies and is more generous. SEIS gives 50% income tax relief on up to £200,000 a year and applies to firms trading under three years; EIS gives 30% on up to £1,000,000 a year (or £2,000,000 where at least £1,000,000 goes to knowledge-intensive companies) and applies to larger, slightly older firms. Both need a three-year hold and offer capital gains and loss reliefs.
How long do I have to hold SEIS shares?
At least three years from the date the shares are issued. Sell or dispose of them before that and HMRC can withdraw the income tax relief you claimed. Holding for the full three years also keeps the capital gains exemption on any growth in the shares, where you received income tax relief.
How do I claim SEIS relief?
The company you invest in must hold HMRC advance assurance and then issue you an SEIS3 certificate after the shares are issued. You use that certificate to claim relief through your Self Assessment tax return or by contacting HMRC directly. You generally need to be a UK taxpayer for the relief to be of use.
What happens to my SEIS relief if the company fails?
SEIS offers loss relief. If the company folds and the shares become worthless, you can set the loss - net of the income tax relief already claimed - against your income or capital gains, which softens the blow. This is general information, not advice; the exact treatment depends on your circumstances, so confirm it with an FCA-regulated adviser and gov.uk.
A closing note, because the sales material rarely volunteers it. The reliefs are real and they're valuable, but they exist because seed-stage failure is common and the shares are illiquid - hard to sell when you want out. SEIS changes the maths of a loss; it doesn't change the odds of one. This article is general information, not financial or investment advice, and tax rules shift. Before committing capital, confirm the current rules with HMRC on gov.uk and take advice from an FCA-regulated adviser.