If you agree to an SEIS deal, HMRC will refund 50% of your investment as income tax relief, up to £200,000 each year. You can claim this for the year you invest or the previous year, using the SEIS3 certificate the company provides. Just enter it on your self-assessment return.
The process slows down when it comes to getting the certificate. The company founder has to submit a compliance statement that HMRC approves, usually months after the shares are issued. Investors only get the certificate once HMRC authorizes it, and this happens on the company's schedule, not the investor's. In this article, I'll explain what the SEIS3 is really worth after loss relief, why you might see certificates for forty investors even if they're not on the company's share register, and the five common ways people lose the relief without meaning to.
If you've just been offered an SEIS deal, or you're fielding the same questions from thirty investors at once, this is written for you.
How Much SEIS Tax Relief Do You Get, and What Are the Limits
You might hear that SEIS offers 50% tax relief, and that's true. But it's easy to misunderstand. SEIS tax relief reduces the income tax you already owe; it doesn't pay you money directly.
HMRC gives you 50% tax relief on the amount you invest in new shares, up to £200,000 per tax year. For example, if you put £40,000 into an SEIS deal, you can take £20,000 off your income tax bill. Only the money used to buy shares counts, so fees and other costs don't qualify.
The tax reduction stops when your tax bill reaches zero. If you invest the full £200,000, you might expect £100,000 in relief, but if your income tax bill is only £70,000, that's all you can claim. HMRC won't pay you the difference. The SEIS investment limit controls how much you can invest for relief. It says nothing about how much tax you personally have to reduce.
Lastly, the £200,000 allowance is yours to use across all your SEIS investments in a tax year, not just one deal. For example, if you invest £50,000 in four different companies, you've used up your allowance. Any amount over £200,000 won't get tax relief, but your shares are still valid.
What a £10,000 SEIS Investment Does to a 45% Taxpayer's Bill
An angel paying 45% income tax puts £10,000 into a qualifying company through a syndicate. And £5,000 of that comes off her income tax bill for that year.
Look at what he/she owns now. £10,000 of shares, for £5,000 of his/her own money. The state funded the other half the moment she filed his/her return.
Why the Loss Is Never the Full £10,000
Say the company dies. Most seed companies do. On paper, you lost £10,000. However, HMRC considers your loss to be £5,000.
This makes sense from HMRC's perspective because you already got £5,000 in relief, which lets you deduct the full £10,000 would mean getting tax relief twice on the same amount. So, the allowable loss is what you actually had at risk, not the total cost of the shares.
Why It Goes Against Income, Not Gains
This is an important detail that many explanations overlook. Normally, you can use a capital loss only against capital gains. If you have no gains that year, it becomes a carried-forward entry you might not use for a decade. A loss with no gain to meet is a voucher for a shop you may never walk into.
Share loss relief changes that. A loss on SEIS shares can go against your income for the year of the loss or the year before it.
Your £5,000 loss is set against income taxed at 45%, so you get £2,250 back. This happens on your next tax return, not years later.
| Item | Amount |
|---|---|
| Subscription | £10,000 |
| SEIS income tax relief at 50% | (£5,000) |
| Allowable loss if the company fails | £5,000 |
| Loss relief against income at 45% | (£2,250) |
| Money the angel loses | £2,750 |
There are two important details:
- Most income tax reliefs are capped at £50,000 a year or 25% of your income, but losses on SEIS shares are not included in this limit.
- Also, if you have enough income, you must deduct the entire loss. You cannot use only part of it to protect your personal allowance.
What Has to Be True First
You must have received the full relief, which depends on your own tax liability. The loss must be from an event HMRC recognizes as a disposal. This could be an arm's length sale, a distribution during the company's winding up, or a negligible value claim on shares that are now worthless but still owned by you.
The worst-case loss on a SEIS investment for someone with a full tax bill is 27.5p in the pound. Investments of this size usually go through an SPV with 30 or 40 other investors, which changes the paperwork but not the calculations. Always check your own numbers with an accountant before making decisions.
SEIS vs EIS: What is the Difference
Well, both schemes do the same job. They help lower your income tax bill when you buy new shares in a small, unlisted company. The main difference between SEIS and EIS is the stage of the company they support. The earlier scheme offers a higher rate because it comes with more risk.
SEIS is used for the first investment in a business. EIS applies to later funding rounds.
| SEIS | EIS | |
|---|---|---|
| Income tax relief | 50% | 30% |
| Maximum per investor, per tax year | £200,000 | £1 million, or £2 million if at least £1 million goes to knowledge-intensive companies |
| Minimum period to keep the shares | 3 years | 3 years |
| Company age | Trading less than 3 years | Within 7 years of first commercial sale |
| Company gross assets | £350,000 or less | £30 million before the issue, £35 million after |
| Company employees | Fewer than 25 | Fewer than 250 |
| Company can raise | £250,000 in total | £10 million a year, £24 million lifetime |
What Changed in April 2026
On 6 April 2026, the EIS company limits doubled. Gross assets increased from £15 million to £30 million, the annual raise limit went from £5 million to £10 million, and the lifetime limit rose from £12 million to £24 million.
A company that was too large for EIS last year may now qualify. Many guides still show the old limits. The only exception is companies in Northern Ireland that trade in goods or electricity, which still follow the old limits.
The Order Cannot Be Reversed
A company must issue SEIS shares before it receives any EIS or VCT investment. If a company takes EIS investment first, it can never use SEIS for that business. Founders can miss out on SEIS by accepting EIS funding before the seed round is finished.
What This Means for You
You do not pick the scheme yourself. The stage of the company decides it, and your certificate will show which scheme you received.
You control your allowance, though. The two schemes are independent, so a SEIS EIS investment across a seed deal and a Series A in the same tax year uses two limits rather than one. Investors who take part in both early and later rounds often plan their SEIS and EIS allocations together.
From Advance Assurance to SEIS3, Step by Step
You sent your investment in March, but now it's September and you still haven't received a certificate. Many angel investors worry something is wrong, but most of the time, there's no problem.
What Advance Assurance is, and What it isn't
SEIS advance assurance means HMRC tells a company, before the funding round, that the planned share issue meets the scheme's requirements. HMRC gives this assurance only for the specific details the company provided. It does not mean HMRC endorses the business or predicts how the investment will do.
Planning permission works in a similar way. It is granted based on the plans you submit. If you change the building, the permission does not automatically apply to the new design.
If a seed round uses both schemes, the company applies for SEIS and EIS advance assurance at the same time, since it must meet the requirements for each scheme separately.
The Four Month Gate
Even after the shares are issued and the money is paid, the company still cannot file any paperwork yet. HMRC will only accept the compliance statement after the company has traded for four months or spent at least 70% of the money raised from that share issue. This is why certificates take months instead of weeks, and it is not the investor's fault.
SEIS1, Then SEIS2, Then SEIS3
The company submits a SEIS1 compliance statement, confirming it has met the conditions and listing the investors who plan to claim.
HMRC reviews the statement. If everything is in order, it sends the company a SEIS2 with a Unique Investment Reference for that share issue. This reference allows the company to issue SEIS3 certificates to the investors listed in the SEIS1.
Without a Unique Investment Reference, the company cannot issue certificates. They cannot send them early, regardless of how nicely you ask.
So, instead of asking when your certificate will arrive, it is more helpful to ask when the company expects to reach the four-month mark or spend 70% of the funds. Every other date depends on that. In a syndicated deal, there is another layer between you and the company, which is where the SPV's role becomes important.
5 Ways Angels Lose SEIS Relief by Accident
Relief is not decided on the day you invest. It is checked over three years, and the most important decisions happen when you are not there.
The SEIS scheme UK rules lead to five common mistakes:
1. A relative joins the round. The 30% test adds your associates' shares to yours. Associates include your spouse or civil partner, parents, grandparents, children, and grandchildren. If your daughter invests in the same company, you could cross the limit without noticing.
2. The share class changes later. SEIS shares must stay ordinary for three years, with no special rights to company assets if it closes and no right of redemption. If a later reorganization gives seed shares priority, you lose the relief, and usually the founder's lawyer makes this change.
3. Money comes from the company. If you receive value from the company or someone connected to it, your relief is reduced or withdrawn. This includes loans, buybacks, or benefits in kind. HMRC ignores small amounts, but it decides what counts. If you receive value, you have 60 days to report it.
4. The shares are sold too early. Relief is checked over three years from when you get the shares, not just on the day you invest. Selling in year two, giving shares to anyone except a spouse, or even tidying up the register can all cancel your relief.
5. The order gets reversed. If EIS or VCT money goes into the company before SEIS shares are issued, the company loses SEIS eligibility permanently.
Most of these issues happen after you have invested, while some are caused by someone else. That's why it helps to have someone watch the register for you, which is a big part of what a lead investor does after the round closes. If you are running a deal, read about starting an angel syndicate.
Making the Claim on Self Assessment, Including Carry Back
You can only make a claim once you have your SEIS3 form, and it includes the Unique Investment Reference. To claim, fill in box 10 in the Other tax reliefs section on the additional information pages of your self assessment return.
You have more time than usual to make your claim. The deadline is five years after 31 January following the tax year when you made the investment. HMRC allows this extra time because the process depends on the company, not just you.
Moving the Relief a Year
A SEIS carry back lets you treat some or all of your shares as if they were issued in the previous tax year.
Two limits apply:
- The £200,000 maximum
- The rate from the earlier year
Carry back is useful if last year's tax bill was higher than this year's, or if you have already used up this year's allowance.
In a syndicated deal, the lead investor handles the paperwork, but each investor makes their own claim. For example, if there are forty investors, each files their own return.
It's important to remember that SEIS relief only applies if you include it on your tax return.
FAQs
What is the SEIS tax relief?
SEIS reduces your income tax bill by 50% of the amount you invest in new shares of a qualifying early-stage company, up to £200,000 a year. If you hold the shares for 3 years, any gain is exempt from capital gains tax. If the company fails, you can claim loss relief on what you had at risk.
Who qualifies for SEIS?
To qualify, you must buy new ordinary shares and pay in cash. You cannot be an employee of the company, but you can be a director. You and your associates must not own more than 30% of the company. The company must have been trading for less than three years and have gross assets of £350,000 or less.
What is SEIS in the UK?
The Seed Enterprise Investment Scheme was introduced in 2012 and is run by HMRC. Its purpose is to encourage private investment in companies that have few other funding options. Instead of giving the company a grant, it reduces the investor's income tax.
How much SEIS can I claim?
You can claim 50% of your investment, up to a maximum of £200,000 per tax year. This means you can get up to £100,000 in relief. The relief cannot be more than the income tax you owe for the year. It can reduce your tax bill to zero, but not below.
What's the difference between EIS and SEIS?
Stage and scale. SEIS gives 50% on up to £200,000 and is available to companies trading for less than 3 years with gross assets of £350,000 or less. EIS gives 30% on up to £1 million and reaches companies within seven years of their first commercial sale with gross assets of £30 million or less.
