SEIS Tax Relief UK

SEIS tax relief UK was permanently enhanced from April 2023 under Finance Act 2023, providing 50% income tax relief on investments of up to £200,000 per year (doubled from £100,000), 50% CGT reinvestment relief on gains, CGT exemption on gains after the three-year holding period, and loss relief on failed investments. The framework targets earlier-stage UK companies than EIS and operates under part 5A of the Income Tax Act 2007. HMRC SEIS statistics show thousands of qualifying companies raising under the scheme each year. British Business Bank data tracks the broader market activity.

SEIS provides 50% income tax relief on up to £200,000 per tax year

SEIS provides 50% income tax relief on qualifying investments of up to £200,000 per tax year, doubled from the previous £100,000 limit by Finance Act 2023 with effect from 6 April 2023. The relief is given as a tax reducer in the year of investment, with a carry-back election to the previous year permitted. The mechanism is set out in part 5A of the Income Tax Act 2007 (introduced by Finance Act 2012 alongside the launch of SEIS) and is operated through self-assessment using SEIS3 compliance certificates issued by the investee company.

For an additional-rate taxpayer investing £200,000 in SEIS, the relief is £100,000 (50%), reducing the net cost of the investment to £100,000. The relief is limited to the investor's income tax liability for the year (or the carry-back year), with no refund of unused relief. The mechanism is structurally favourable for the highest-earning investors but available across all rate bands.

The company fundraising limit was raised to £250,000 from April 2023

Companies raising under SEIS can raise up to £250,000 lifetime under the scheme from April 2023, raised from £150,000 by Finance Act 2023 in the same enhancement package as the investor limit increase. The lifetime cap is the cumulative total of SEIS investment across the company's history, not an annual limit. Once the £250,000 cap is reached, further SEIS-qualifying fundraising is not permitted. The company can continue to raise under the broader EIS scheme, with SEIS typically used for the earliest seed rounds and EIS for follow-on financing.

The cap is intended to focus SEIS on the pre-product or pre-revenue stage of company development. The company must have been trading for less than three years at the date of the SEIS investment, with the start date determined under specific rules in the Income Tax Act 2007. HMRC publishes guidance on the trading start date determination, particularly where the company has migrated from a sole trader or partnership structure.

50% CGT reinvestment relief applies on gains rolled into SEIS

SEIS provides 50% reinvestment relief on capital gains realised on other assets that are then invested in qualifying SEIS shares within the eligible window, effectively exempting half of the original gain from CGT. The mechanism is set out in Schedule 5BB of the Taxation of Chargeable Gains Act 1992 and is distinct from the EIS CGT deferral relief (which defers rather than reduces the gain). The 50% reinvestment relief is permanent: the half of the gain that is sheltered does not crystallise on disposal of the SEIS shares. The other half remains taxable at the relevant CGT rate when the original asset gain crystallised.

For a higher-rate taxpayer realising a £100,000 gain (at 24% CGT under Finance Act 2024 from April 2024) and reinvesting £200,000 in SEIS, the reinvestment relief reduces the taxable gain to £50,000, saving £12,000 of CGT. Combined with the 50% income tax relief on the SEIS investment itself (£100,000), the total tax saving is £112,000 on a gross investment of £200,000.

SEIS shares held for the three-year period are CGT-exempt on disposal

Capital gains realised on SEIS shares sold after the three-year minimum holding period are exempt from CGT, provided the income tax relief was claimed and has not been withdrawn. The three-year period runs from the issue of the shares. The exemption applies only to the SEIS shares themselves, not to any unrelated holdings. The structural value of the exemption is material given the elevated CGT rates introduced by Finance Act 2024 (24% on most assets from April 2024).

The CGT exemption combined with the upfront 50% income tax relief and the CGT reinvestment relief produces an effective tax-relieved investment for an additional-rate taxpayer reinvesting a CGT gain. The combined relief package makes SEIS one of the most tax-favoured investment routes available to UK taxpayers, though the relief comes with the underlying investment risk of seed-stage equity.

The £350,000 gross assets test limits qualifying company size

SEIS-qualifying companies must have gross assets of £350,000 or less at the time of the SEIS investment, raised from £200,000 by Finance Act 2023. The threshold is structurally favourable for very early-stage companies but limits the use of SEIS for slightly more developed businesses. Once a company exceeds the £350,000 gross assets threshold, it can no longer raise under SEIS, though it may qualify for EIS, which has a much higher £15m gross assets test at the time of investment.

The gross assets test is applied at the time of the SEIS share issue, before the SEIS proceeds are received. Companies near the threshold should plan the timing of the SEIS issue carefully to ensure compliance. HMRC has published worked examples covering the application of the gross assets test in different fundraising structures.

Loss relief allows SEIS losses to be offset against income or gains

Losses on SEIS shares can be offset against the investor's income for the year of loss or the previous year, or against capital gains, with the loss calculated as the original cost less any income tax relief claimed and less any sale proceeds. For an additional-rate taxpayer who invested £100,000 in SEIS, claimed £50,000 of income tax relief, and recovered nothing on a write-off, the loss is £50,000 against income at 45%, equivalent to a further £22,500 of tax saved. Combined with the original £50,000 income tax relief, the total recovery is £72,500 on a £100,000 investment, capping the net loss at £27,500.

The combination of upfront 50% income tax relief and 45% loss relief on the residual loss caps the maximum after-tax loss on a SEIS investment at substantially below the gross investment amount, providing downside protection that is unique to SEIS and EIS in the UK tax framework. The mechanism is set out in section 131 of the Income Tax Act 2007.

HMRC advance assurance is widely used by SEIS-issuing companies

HMRC operates an advance assurance process under which SEIS-issuing companies can apply for confirmation that their proposed share issue will qualify for SEIS relief, providing certainty for investors before funds are committed. The advance assurance application requires the company to provide its business plan, share issue terms, and confirmation that it meets the qualifying conditions. The assurance is non-binding but represents HMRC's view based on the information provided. Almost all formal SEIS rounds proceed on the basis of advance assurance.

HMRC has progressively tightened the advance assurance application requirements, particularly around the substance of the trading activity, the use of the funds for qualifying purposes, and the absence of connected-party arrangements that would breach the SEIS rules. Companies preparing an SEIS round should engage with the advance assurance process early in the fundraising timeline.

What is SEIS tax relief UK rate?

SEIS provides 50% income tax relief on qualifying investments of up to £200,000 per tax year in earlier-stage UK companies. The relief is given as a tax reducer in the year of investment, with a carry-back election to the previous year permitted under Income Tax Act 2007 part 5A.

What is the SEIS limit 2024?

The annual investor limit for SEIS is £200,000 from April 2023, doubled from £100,000 under Finance Act 2023. The company-level lifetime cap was raised to £250,000 in the same enhancement. Both limits continue at those levels for 2024/25, 2025/26, and 2026/27 under current legislation.

How does SEIS vs EIS comparison work?

SEIS provides 50% relief on smaller investments (up to £200,000 per year) in earlier-stage companies (less than three years trading, gross assets up to £350,000). EIS provides 30% relief on larger investments (up to £1m, or £2m with knowledge-intensive companies) in broader SMEs. Both have a three-year holding period and CGT exemption on gains.

What are the SEIS qualifying company requirements?

The company must be UK-resident, have gross assets of £350,000 or less at the time of the share issue, have been trading for less than three years, have no more than 25 full-time-equivalent employees, and carry on a qualifying trade. The full conditions are set out in Income Tax Act 2007 part 5A and HMRC guidance.

How does the seed enterprise investment scheme CGT reinvestment relief work?

SEIS provides 50% CGT reinvestment relief on gains realised on other assets and then reinvested in qualifying SEIS shares within the eligible window. The mechanism is set out in Schedule 5BB of the Taxation of Chargeable Gains Act 1992. The relief is permanent: the sheltered half of the gain does not crystallise on disposal of the SEIS shares.

Can SEIS losses be offset against income?

Yes. Losses on SEIS shares can be offset against the investor's income for the year of loss or the previous year, or against capital gains. The combination of upfront 50% income tax relief and the loss relief on the residual loss caps the maximum after-tax loss on a SEIS investment at substantially below the gross investment amount.

How we verified this

This article draws on the following primary UK sources:

• HMRC: SEIS statistics and SEIS guidance (SEISGUIDE)
• Income Tax Act 2007 (legislation.gov.uk) part 5A for the SEIS framework
• Finance Act 2012 (legislation.gov.uk) for the original SEIS introduction
• Finance Act 2023 (legislation.gov.uk) for the April 2023 enhancement
• Taxation of Chargeable Gains Act 1992 (legislation.gov.uk) Schedule 5BB
• British Business Bank: SEIS and EIS market reports
• gov.uk: SEIS and EIS investor guidance

No secondary aggregators, no press releases from commercial providers, and no statistics without a named government or regulatory source were used.