How To Claim SEIS Tax Relief

Deciding to invest in an early-stage company is rarely a quick decision. You've done the diligence, weighed the risks, spoken to the founders and, eventually, committed your capital.

The investment, though, isn't quite the finish line.

If you've invested in a qualifying SEIS company and claim correctly, you could reduce your income tax bill by up to 50% of the amount you invested, alongside other valuable tax reliefs that may be available depending on your circumstances. But understanding what you can claim, when you can claim it and the conditions you need to keep meeting matters just as much as making the investment itself.

We've helped many investors through that process, and the questions tend to be remarkably similar each time. This guide brings together the practical checklist we share with our own investors to help make sure nothing gets overlooked. It explains who qualifies, how the claim works, the deadlines to be aware of and the common mistakes that can cost investors relief they've legitimately earned.

This guide provides a general overview of the Seed Enterprise Investment Scheme(SEIS) and isn't personal tax advice. Tax treatment depends on your individual circumstances and may change. If you're unsure how the rules apply to you, it's worth speaking to a qualified tax adviser.

First, make sure the investment actually qualifies

Most SEIS problems don't begin when someone submits a claim to HMRC. They begin much earlier, when an investor assumes that because a company is raising under SEIS, everything will automatically qualify.

It doesn't work quite like that.

The company has to meet the scheme's requirements, and so do you. The good news is that most of these checks can be made before you invest, when it's still easy to ask questions or clarify anything you're unsure about. Once the shares have been issued, your options become much more limited.

a. Check that the company qualifies

Responsibility for meeting the SEIS rules largely sits with the company, but it's still worth understanding the basics yourself.

In broad terms, the company should be a small, early-stage UK business carrying on a qualifying trade. Ideally, it will also have received Advance Assurance from HMRC.

It’s worth noting here that Advance Assurance isn't a guarantee that your shares will qualify for SEIS relief. Rather, it's HMRC's indication that, based on the information provided, the proposed investment appears to meet the requirements of the scheme. The final position still depends on what actually happens when the shares are issued and whether the relevant conditions continue to be met.

A founder should normally be able to explain whether the company has Advance Assurance or, if not, why they have decided to proceed without it. Neither answer is necessarily a reason not to invest, but if they can't explain either, it's worth asking a few more questions before committing your capital.

b. Check that you qualify

Your own eligibility is simpler, but it's entirely your responsibility.

In broad terms, you'll normally need to:

• subscribe for newly issued ordinary shares, paying for them in full and in cash;
• avoid becoming "connected" with the company, which generally means you (together with certain associates) don't own more than 30% of its ordinary share capital, voting rights or assets on a winding up, and you aren't an employee. Directors are treated differently here: unlike a general employee, a director can still qualify for SEIS relief, so being on the board isn't a barrier in itself; and
• intend to hold the shares for at least three years from the date they are issued.

The rules themselves aren't especially complicated. Where investors get stuck is that circumstances can change after they've invested. Taking on an employed role within the business, increasing your shareholding beyond the permitted limits or receiving certain forms of value from the company can all affect whether the investment continues to qualify. 

That's why it's worth checking these points before investing and again if your relationship with the company changes later.

What you can actually claim

When most people think about SEIS, they think about the headline benefit: 50% income tax relief.

That's certainly the biggest attraction, but it isn't the only one. Depending on your circumstances, SEIS can offer up to four separate tax reliefs. Some reduce the cost of making the investment, others affect what happens if you later make a profit or a loss.

Here's how each one works.

1. Income tax relief

This is the relief most investors claim.

You can reduce your income tax bill by 50% of the amount you invest, up to the annual SEIS investment limit of £200,000.

For example, if you invest £20,000 into a qualifying SEIS company, you may be able to reduce your income tax bill by £10,000.

The relief reduces the income tax you owe. It isn't simply paid to you in cash, so you'll need to have sufficient income tax liability to make full use of it. If you can't use all of the relief in the current tax year, you may also be able to carry all or part of the investment back to the previous tax year, provided the relevant conditions are met.

2. Capital gains reinvestment relief

If you've realised a capital gain on another asset and reinvest that money into qualifying SEIS shares, on which you also obtain SEIS income tax relief, you may be able to exempt 50% of that gain from Capital Gains Tax, up to a maximum exempt gain of £100,000 in a tax year.

This relief is separate from the income tax relief, so, depending on your circumstances, you may be able to benefit from both.

3. Capital Gains Tax exemption on disposal

If you've claimed SEIS income tax relief and keep the shares for at least three years, any gain you make when you eventually sell those shares may be free from Capital Gains Tax.

This applies to the gain made on the SEIS investment itself, provided the qualifying conditions continue to be met throughout the relevant period.

4. Loss relief

Not every early-stage investment succeeds. If a qualifying investment ultimately becomes worthless or is sold at a loss, you may be able to claim further tax relief after taking account of any income tax relief you've already received.

For example, an investor paying income tax at the 45% additional rate who invests £1 could claim 50p in income tax relief, leaving 50p at risk. If the investment fails, loss relief at 45% on that remaining 50p could reduce the loss by a further 22.5p, bringing the effective cost of the investment down to 27.5p. The amount of relief available will depend on the investor’s individual tax position.

Taken together, these reliefs are designed to improve the risk-reward balance of investing in very early-stage businesses. Which ones apply to you will depend on your circumstances, and you'll still need to claim each relevant relief correctly as none of them is applied automatically.

Inheritance Tax Business Relief

Shares in an unlisted trading company may also qualify for Business Relief from Inheritance Tax if they have been held for at least two years and the relevant conditions are met. For deaths on or after 6 April 2026, 100% relief is available on up to £2.5 million of qualifying business and agricultural property, with 50% relief potentially applying above that allowance.

This isn’t claimed through SEIS or using the SEIS3 certificate. It becomes relevant when an estate’s Inheritance Tax position is assessed, and eligibility depends on the shares and the company still meeting the Business Relief rules at that point.

How to claim, step by step

Once you've invested, the claim process is largely a matter of timing. The key thing to remember is that you can't claim immediately after buying the shares. The company has to complete part of the process first.

Step 1: Wait for your SEIS3 certificate

Before investors can claim relief, the company must satisfy HMRC that it has met the requirements of the scheme.

In practice, that means the company must normally either have been carrying on the qualifying trade for at least four months or have spent at least 70% of the money raised by the relevant share issues. It then submits a compliance statement known as the SEIS1 form) to HMRC.

If HMRC is satisfied that the investment qualifies, it authorises the company to issue SEIS certificates to its investors. HMRC typically sends the company two documents.

The first (SEIS2) confirms that the share issue qualifies and includes the Unique Investment Reference (UIR). The second (SEIS3) is completed by the company and sent to each investor.

This is the document you'll need to support your claim. Until you've received it, there's nothing to submit to HMRC.

If it hasn't arrived when you expected, your first call should normally be to the company rather than HMRC. In most cases, the delay is simply because the compliance process hasn't yet been completed.

Step 2: Submit your claim

Once you've received your SEIS3 certificate, you're ready to claim the relief.

If you complete a Self Assessment tax return, you'll enter the information from the certificate in the relevant section of your return for the tax year in which the shares were issued. The SEIS3 contains everything you'll need, including the company's details, the amount invested, the share issue date and HMRC's reference number.

If you don't usually complete a Self Assessment tax return, you can still claim by completing the relevant section of the SEIS3 form and asking for the relief to be reflected in your PAYE tax code.

Step 3: Consider whether to carry the relief back

Before submitting your claim, it's worth considering whether you'd be better off carrying all or part of the investment back to the previous tax year.

SEIS allows you to treat qualifying investments as though they had been made in the previous tax year, provided the relevant conditions are met. This can be particularly useful if your income tax liability was higher in that year or if you've already used much of your relief in the current one.

The annual investment limit and your available income tax liability still apply, so it's worth checking the numbers before making the election.

Once HMRC has processed your claim, the relief is normally given by reducing the tax you owe or by refunding tax you've already paid.

Deadlines and the three-year rule

There are two dates worth keeping in mind after you've invested. One is the deadline for making your claim. The other is the three-year holding period for keeping the relief you've claimed.

Don't leave your claim until the deadline

You have longer than many people realise to claim SEIS tax relief. In most cases, the deadline is five years after 31 January following the end of the tax year in which the shares were issued, or are treated as issued where a carry-back election has been made.

That sounds like plenty of time, and legally it is. The problem is that it's easy to forget. The SEIS3 certificate arrives, gets filed away and gradually slips off the radar.

Our advice is simple: once you've received your SEIS3 certificate and have everything you need, make the claim. There's little to gain by putting it off.

Hold the shares for at least three years

Making the claim is only part of the process. To keep your SEIS income tax relief, you'll normally need to hold the shares for at least three years from the date the shares were issued.

Selling before then is the most obvious way to lose the relief, but it's not the only one. In some circumstances, relief can also be withdrawn if the company no longer meets the SEIS qualifying conditions.

Some of those requirements sit with the company rather than the investor, which is one reason it's worth investing in businesses that understand their SEIS obligations and take them seriously.

Once the three-year qualifying period has passed, you've met one of the key conditions for keeping the relief. Until then, it's sensible to think twice before selling your shares or making assumptions about the tax position.

Bringing it all together

Claiming SEIS tax relief isn't especially complicated, but it does reward being organised. Most of the problems investors run into aren't caused by obscure tax rules. Rather, they're caused by ordinary oversights: paperwork that's put to one side, a qualifying condition that's misunderstood or a deadline that's assumed to be too far away to matter.

If you remember just three things, make them these:

• Qualify. Make sure both you and the company meet the SEIS rules before you invest.
• Claim. Keep your SEIS3 certificate and submit your claim as soon as you're able.
• Keep. Hold the shares for at least three years unless you've taken professional advice.

Want a version you can keep for tax season?

Download our free SEIS Claim Checklist (PDF).

P.S. We've recently opened the second £1.5m raise for the EHE Ventures (S)EIS AI Growth Fund, backing ambitious early-stage, AI-first companies across the UK.

If you'd like to learn more about the fund, the companies we're backing, and how to become part of the journey, you can apply here: ehe.ai/investor-platform

*This communication is from EHE Ventures Limited, which is an Appointed Representative of Infinity Asset Management LLP which is authorised and regulated by the Financial Conduct Authority