Tax treatment depends on individual circumstances and may change
Last updated: Aug 2026
The Seed Enterprise Investment Scheme (SEIS) is a venture capital scheme introduced by the UK government in 2012 to help very early-stage (pre-seed and seed) companies raise equity funding. In exchange for backing companies at the riskiest stage of their life, investors receive the most generous package of tax reliefs available in the UK.
Investors receive 50% income tax relief on up to £200,000 invested each tax year into qualifying pre-seed and seed-stage companies, plus capital gains tax (CGT) exemption on growth after three years and 50% CGT reinvestment relief.
A record £276 million was invested through SEIS in 2024-25 (HMRC, May 2026). That capital went into 2,430 companies, up 14% on the year before. The latest SEIS statistics are collected on our annually updated reference page.
SEIS offers five distinct reliefs. Reliefs apply to a maximum of £200,000 invested per investor, per tax year.
Tax treatment depends on individual circumstances and may be subject to change. The availability of tax relief depends on the company maintaining its qualifying status.
The minimum holding period for income tax and CGT relief is 3 years. HMRC will claw back relief on shares sold before then.
Most individual UK taxpayers can claim SEIS relief. Companies and trusts cannot. You can claim 50% income tax relief on up to £200,000 a year, set against that year’s income tax or carried back to the year before, and you need to hold the shares for at least three years to keep it. The main exclusions: you cannot be connected to the company, broadly paid employees, partners and directors (unpaid directors can still claim), or anyone holding 30% or more of its shares, and your relief cannot exceed the income tax you actually pay in the year. If you are unsure about your position, speak to a qualified tax adviser.
The examples below are illustrations only, not advice or a projection of returns. They assume an additional-rate (45%) income taxpayer with a £24,000 capital gains tax bill from selling a second home (24% residential CGT rate, 2026/27). Most early-stage companies fail — the first scenario is the most likely outcome for any single company.
A £10,000 investment, three outcomes:
The company fails. Your shares are worth £0. You claimed £5,000 income tax relief up front, and can claim loss relief on the £5,000 at risk — £2,250 at the 45% rate. Total loss: £2,750 of your £10,000.
The company breaks even. You sell your shares for £10,000 after three years, having claimed £5,000 in income tax relief. Combined, you've received £15,000 back.
The company doubles. Your shares are worth £20,000. Because you claimed £5,000 income tax relief and held the shares for a minimum of three years, there is no CGT on the gain. You've received a total of £25,000 back from your £10,000 investment.
A £100,000 investment alongside a £24,000 CGT bill:
Shares fall to zero. Loss relief on the £50,000 at risk adds £22,500 at the 45% rate. Total relief: £84,500. Your effective loss on £100,000 is £15,500 — 15.5%.
Shares stay flat. You claim £50,000 income tax relief plus £12,000 CGT reinvestment relief (half your £24,000 bill). You've recovered £62,000 — 62% of your investment — before any growth.
Shares grow 50%. Because you claimed income tax relief, the £50,000 gain on your shares is CGT-free after three years. With £62,000 of relief on top, your effective gain is 112%.
Calculations based on an additional-rate taxpayer. Combined, the reliefs cap downside exposure at 27.5p per £1 invested for a 45% taxpayer, provided the reliefs are claimed and retained — while gains remain untaxed. Illustration only. Tax reliefs are subject to status and change.
SEIS companies are young, unquoted and unproven. It should not be a surprise then to learn that most seed-stage investments don’t come good. In our white paper, The Mathematics of UK Venture Capital, we examined the UK startup ecosystem, analysing returns from 5,393 companies and over 300,000 investor records to uncover actionable insights for early-stage investors. Of the 5,393 UK startups analysed, 38% ended with a total loss: the holding was written off or sold for nothing. On the wider measure, which counts total losses plus companies that survive without ever reaching an exit and thus never return capital, SyndicateRoom’s market analysis puts the figure at 60% to 70%.
And while the reliefs reduce the cost of failure, they do not prevent it entirely. On a £10,000 investment that fails completely, income tax relief and loss relief still leave an additional-rate taxpayer £2,750 down.
Three further risks matter as much as the failure rate.
None of this is an argument against SEIS. It is an argument about how you hold it, which is what the next section is about.
The main ways investors invest in SEIS-eligible companies are:
Direct investment — through angel networks, accelerators, or crowdfunding platforms. You choose individual companies, handle your own due diligence, and claim relief yourself on each holding.
Through an SEIS fund — a manager builds you a portfolio of SEIS-qualifying companies, spreading the risk across several ventures. Visit our open SEIS fund.
| Direct investment | Through a fund | |
|---|---|---|
| Time required | High. You source, assess, and manage each holding | Low — selection and diligence are done for you |
| Diversification | Depends on how many companies you back individually | Built in, typically 4-10+ companies per fund |
SEIS3 paperwork | The company will provide the SEIS certificate directly to you | The fund will provide one certificate for each underlying company invested in |
Typical minimum | Varies by platform/round | £10,000 or more |
Best suited to | Investors who want to pick companies themselves | Investors who want SEIS exposure without doing the picking |
A single SEIS investment is a bet on one company. A diversified SEIS portfolio is a bet on that broader trajectory.
SyndicateRoom's current SEIS offering is the Carbon13 SEIS Fund. The fund invests in pre-seed climatetech companies built through Carbon13's venture builder, which since 2021 has invested £13 million across more than 90 climatetech startups.
SEIS suits investors who can hold for the long term and who treat it as one part of a diversified portfolio, not a concentrated bet on one or two companies. It’s not suited to money you might need in the next seven to ten years. If you need liquidity, income, or lower-risk exposure, SEIS is not the right tool.
SEIS backs companies at the earliest and riskiest stage, which is why it carries the highest reliefs and the highest chance of total loss. EIS does a similar job one stage later, with a much larger allowance and lower relief. A VCT gives you shares in a listed trust that holds the companies, rather than the holdings themselves, and pays its return mainly as dividends. A stocks and shares ISA is not a venture scheme at all, but it is the tax-free alternative most investors weigh these against.
| SEIS | EIS | VCT | Stocks & shares ISA | |
|---|---|---|---|---|
| Income tax relief | 50% | 30% | 20% | None |
| Annual allowance | £200,000 | £1m, or £2m if knowledge-intensive | £200,000 | £20,000 across all ISAs |
| Minimum hold to keep relief | 3 years | 3 years | 5 years | None |
| CGT on your gains | None after 3 years | None after 3 years | None | None |
| Relief on other gains | 50% reinvestment relief | Unlimited deferral until the EIS shares are sold | None | None |
| Loss relief | Yes, on at-risk capital | Yes, on at-risk capital | No | No |
| Dividends | Rare at this stage | Rare at this stage | Tax-free, and the main source of return | Tax-free |
| IHT relief | After 2 years via Business Relief, within the £2.5m allowance | After 2 years via Business Relief, within the £2.5m allowance | None | None |
| What you actually own | Shares in individual pre-seed companies | Shares in individual early-stage companies | Shares in a listed trust that holds the companies | Whatever investments you choose to hold |
| How you get your money back | Only if a company is acquired or floats. Typically 7 to 10 years, sometimes longer | Only if a company is acquired or floats. Typically 5 to 10 years | Dividends, plus selling your VCT shares on the stock exchange | Sell whenever you want |
| Capital at risk | Total loss is the most likely outcome for any single company | High | High | Depends on what you hold |
For the full comparison, see EIS vs SEIS compared or our Enterprise Investment Scheme guide.
To qualify, a company must:
be less than 3 years old
have fewer than 25 full-time equivalent employees
have gross assets of no more than £350,000 before the investment
raise no more than £250,000 under SEIS in total
carry out a qualifying trade
have received no previous EIS or VCT investment
Shares must be new, ordinary, non-redeemable, with no special rights, paid for in full and in cash. The risk-to-capital condition applies to shares issued on or after 15 March 2018.
Most trades qualify, but HMRC excludes a specific list. Dealing in land, shares or commodities, banking, insurance and other financial activities, leasing, legal and accountancy services, property development, farming, running hotels or nursing homes, and generating electricity that attracts a feed-in tariff are all excluded. A company also fails the test if an excluded activity forms a substantial part of its trade, which HMRC treats as more than 20%. The full list is in HMRC’s excluded activities guidance.
Companies can apply to HMRC for SEIS Advance Assurance before raising. Demand at the front of the funnel is at a record: HMRC received 4,085 SEIS advance assurance applications in 2025-26, up 24% year on year (HMRC, May 2026). Before investing directly, ask whether the company holds it.
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