CINXE.COM
SEIS Scheme - SEIS Tax Relief Explained - SEIS F6S Services
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The SEIS scheme can help investors claim tax relief of up to £100,000 every year." name="description"/><meta content="SEIS Scheme - SEIS Tax Relief Explained - SEIS F6S Services" property="og:title"/><meta content="Seed Enterprise Investment Scheme - A detailed guide to the SEIS scheme for investors and businesses looking for SEIS investments. The SEIS scheme can help investors claim tax relief of up to £100,000 every year." property="og:description"/><meta content="SEIS Scheme - SEIS Tax Relief Explained - SEIS F6S Services" property="twitter:title"/><meta content="Seed Enterprise Investment Scheme - A detailed guide to the SEIS scheme for investors and businesses looking for SEIS investments. The SEIS scheme can help investors claim tax relief of up to £100,000 every year." property="twitter:description"/><meta property="og:type" content="website"/><meta content="summary_large_image" name="twitter:card"/><meta content="width=device-width, initial-scale=1" name="viewport"/><meta content="_QCbec5vmQ-7sf3ix_caL8iVmSa0c9ICDDoRAv_vmoA" name="google-site-verification"/><link href="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/css/f6s.webflow.b8fb918db.min.css" rel="stylesheet" type="text/css"/><link href="https://fonts.googleapis.com" rel="preconnect"/><link href="https://fonts.gstatic.com" rel="preconnect" crossorigin="anonymous"/><script src="https://ajax.googleapis.com/ajax/libs/webfont/1.6.26/webfont.js" type="text/javascript"></script><script type="text/javascript">WebFont.load({ google: { families: ["Open Sans:300,300italic,400,400italic,600,600italic,700,700italic,800,800italic"] }});</script><script type="text/javascript">!function(o,c){var n=c.documentElement,t=" w-mod-";n.className+=t+"js",("ontouchstart"in o||o.DocumentTouch&&c instanceof DocumentTouch)&&(n.className+=t+"touch")}(window,document);</script><link href="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/5bfc1d4c94633b190ef73ab3_favicon.png" rel="shortcut icon" type="image/x-icon"/><link href="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/5bfc1d5fe71e8803999b51f9_icon.png" rel="apple-touch-icon"/><!-- Google Tag Manager --> <script>(function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start': new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0], j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src= 'https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f); })(window,document,'script','dataLayer','GTM-K5856KF');</script> <!-- End Google Tag Manager --> <script> var _paq = window._paq = window._paq || []; /* tracker methods like "setCustomDimension" should be called before "trackPageView" */ _paq.push(['disableCookies']); _paq.push(['trackPageView']); _paq.push(['enableLinkTracking']); (function() { var u="https://f6s.matomo.cloud/"; _paq.push(['setTrackerUrl', u+'matomo.php']); _paq.push(['setSiteId', '1']); var d=document, g=d.createElement('script'), s=d.getElementsByTagName('script')[0]; g.async=true; g.src='//cdn.matomo.cloud/f6s.matomo.cloud/matomo.js'; s.parentNode.insertBefore(g,s); })(); </script><link rel="canonical" href="https://www.f6s.com/seis-scheme-explained" /></head><body class="basicstyle"><div data-collapse="medium" data-animation="default" data-duration="400" data-easing="ease" data-easing2="ease" role="banner" class="navbar services rdsitenav w-nav"><div class="rdcontainer rdflexhorizontal"><div class="rdnavleft"><a href="https://www.f6s.com/" class="w-nav-brand"><img src="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/5bf8141d6ffe1961d6a906d1_F6S-logo.svg" loading="lazy" width="56" height="56" alt="F6S logo" class="f6slogo"/></a><nav role="navigation" class="rdnavmenu w-nav-menu"><a href="https://www.f6s.com/seis-eis-scheme-for-uk-startups" class="rdsitenavlink w-nav-link">SEIS/EIS for Startups</a><a href="https://www.f6s.com/seis-scheme-explained" class="rdsitenavlink w-nav-link">SEIS scheme explained</a><a href="https://www.f6s.com/eis-scheme-explained" class="rdsitenavlink w-nav-link">EIS scheme explained</a></nav></div><div class="menu-button w-nav-button"><div class="icon w-icon-nav-menu"></div></div></div></div><div id="what" class="rdsitesection margin80 topmargin120"><div class="rdcontainer rdflexcenter"><h1 class="h38 center rd">SEIS Scheme Explained<br/></h1><div class="b21 center margin-top16">The Seed Enterprise Investment Scheme (SEIS) scheme can help investors claim tax relief of up to £200,000 every year</div></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">What is the SEIS scheme?<br/></h2><div class="rdtext18">HMRC established the Seed Enterprise Investment Scheme (SEIS) in April 2012 to assist startups in raising capital from interested investors by giving them tax relief on the investments made in companies that qualify for the SEIS scheme. <br/>The SEIS scheme can help investors claim tax relief of up to £200,000 every year, which potentially covers about 78% of the investment made towards startups.<br/>There are two forms of schemes that help investors invest in startups. </div><ul role="list" class="list-4"><li class="list-item rdtext18">SEIS when the investment amount does not exceed £200,000</li><li class="list-item rdtext18">EIS (Enterprise Investment Scheme) when the investment amount exceeds £200,000</li></ul></div></div><div id="what" class="rdsitesection margin80 topmargin120 topmargin40"><div class="rdcontainer rdflexcenter"><h1 class="h38 center rd">SEIS tax Relief Explained<br/></h1></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">Why was the SEIS scheme introduced?<br/></h2><div class="rdtext18">The SEIS scheme was introduced to encourage investment into small businesses, which are considered risky investments. This scheme helps new businesses raise capital while reducing the cost of investments for the investors. </div></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">When can the SEIS scheme be used?<br/></h2><div class="rdtext18">When a small and new business issues new shares that meet the following criteria:</div><ul role="list" class="list-4"><li class="list-item rdtext18">Gross Assets of less than £350,000 (£200,000 for shares issued before 6 April 2023)</li><li class="list-item rdtext18">Staff of 25 or fewer</li><li class="list-item rdtext18">Company trading for less than three years</li></ul><div class="rdtext18">If a company meets the above criteria, investors can potentially invest in the company and receive the benefits under the SEIS scheme.<br/></div></div></div><div class="ctasectionshadow rdsitehomepagebottomcollection"><h3 class="servicessectiontitlesecondary">F6S can help with your SEIS tax relief claim</h3><div class="ctacontainer"><p class="gdpr-text">By providing this personal information, you confirm you agree to us using it to provide our services and to keep in touch regarding information we think may interest you. You also confirm agreement to the <a href="https://www.f6s.com/terms" target="_blank" class="gdpr-link">Terms of Service</a> and <a href="https://www.f6s.com/privacy-policy" target="_blank" class="gdpr-link">Privacy Policy</a>. You can change your mind about receiving information from us as set out in our policies.</p><div class="form-block-4 w-form"><form id="wf-form-RD-Article-Services" name="wf-form-RD-Article-Services" data-name="RD Article (Services)" method="get" class="side-by-side" data-wf-page-id="639c76e7c216ec0c9b2999b2" data-wf-element-id="e2be82dc-192e-808c-7f49-54e56ab074de"><input class="ctatextfield w-input" maxlength="256" name="phone-email-2" data-name="Phone Email 2" placeholder="Phone number or email please" type="text" id="phone-email-2" required=""/><input type="submit" data-wait="Please wait..." class="servicescta-3 rdsitecta w-button" value="Get free consult"/></form><div class="success-message-4 w-form-done"><div>We'll get in touch right away<br/></div></div><div class="error-message-2 w-form-fail"><div class="text-block-2 hero">Try again pls, something went wrong</div></div></div></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">Who can invest in a company that qualifies for the SEIS scheme?<br/></h2><div class="rdtext18">To take advantage of the SEIS scheme, an investor must be an unconnected person to the company. Apart from that, an investor must:<br/></div><ul role="list" class="list-4"><li class="list-item rdtext18">Not hold more than 30% shares in the company</li><li class="list-item rdtext18">Not be an employee of the company</li></ul></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">What is the tax relief offered in the SEIS scheme?<br/></h2><div class="rdtext18">An investor that invests in a SEIS scheme qualified company, can get 50% of their investment back as a direct tax reduction, up to £200,00<br/></div></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">Benefits of SEIS tax relief<br/></h2><div class="rdtext18">An investment made into a SEIS scheme qualified company allows investors to get tax relief under the SEIS scheme.<br/></div><div class="rdtext18">Here are some detailed benefits and advantages of the SEIS scheme for the investors:<br/></div><ul role="list" class="list-4"><li class="list-item rdtext18">Individual IT tax relief of 50% of the invested amount</li><li class="list-item rdtext18">Exemption from capital gains tax made from the sale of SEIS scheme qualified shares</li><li class="list-item rdtext18">Exemption from capital gains tax made via realised profits within the last three years (if reinvested)</li><li class="list-item rdtext18">Exemption if the company fails as loss relief, including during the holding period</li></ul></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">Companies that qualify for the SEIS scheme<br/></h2><div class="rdtext18">Type of companies that will be eligible for the SEIS scheme should meet the following criteria:<br/></div><ul role="list" class="list-4"><li class="list-item rdtext18">Permanent establishment in the UK</li><li class="list-item rdtext18">The shares are issued must not be tradeable on the London stock exchange</li><li class="list-item rdtext18">Excluding the qualifying subsidiaries the company should not control other companies</li><li class="list-item rdtext18">Another business can own up to 50% of the shares and not more than that.</li><li class="list-item rdtext18">The maximum gross assets should not exceed £350k pre-investment (£200,000 for shares issued before 6 April 2023)</li><li class="list-item rdtext18">The number of employees should not exceed 25</li><li class="list-item rdtext18">No VCT (Venture capital trust) has made an investment </li><li class="list-item rdtext18">Trading for three years or less</li></ul></div></div><div class="rdsitesection margin80 seiscontainerwithimage"><div class="rdcontainer rdcolumns rdwithig seiswithig"><div class="rdcontainercolumn"><h2 class="b28 left-align">How do you apply for the SEIS scheme?<br/></h2><div class="rdtext18">The company can start by getting Advance Assurance (AA), which is HMRC's way of confirming that investors in the company can get the tax benefits of SEIS when they purchase shares. When applying for the investment, the Advance Assurance must be thorough, defendable, and truthful. If not, it can make the Advance Assurance void.<br/></div><div class="rdtext18">Here is a step by step guide on how to apply for SEIS Advance Assurance:<br/><br/></div><div class="rdtext18">Step 1. Make sure the right person from the company is applying for the SEIS scheme. A director or secretary of the company are the only people that can file for Advanced Assurance or authorise an application. You can also use an agent such as F6S to prepare, submit, and ensure the application is correctly processed.<br/><br/></div><div class="rdtext18">Step 2. Gather essential information for the application.Provide information to HMRC and tell them that investments in the company qualify for SEIS. Some of the information you will have to prepare is:<br/></div><ul role="list" class="list-4"><li class="list-item rdtext18">The approximate amount that the company is going to raise</li><li class="list-item rdtext18">Company’s financial forecasts</li><li class="list-item rdtext18">Company’s business plan</li><li class="list-item rdtext18">Company’s most recent accounts</li><li class="list-item rdtext18">Details on how the company will use the SEIS investment</li><li class="list-item rdtext18">Information about the ongoing trading activities and how much the company plans to spend on each activity</li><li class="list-item rdtext18">Information about previous Venture Capital Trusts if the company has enrolled into and how much the company got from them</li><li class="list-item rdtext18">Latest memorandum/articles of association</li><li class="list-item rdtext18">Register of members, which must be from the date the company applies for Advance Assurance</li><li class="list-item rdtext18">The latest documents the company has used to explain business proposals to interested investors.</li><li class="list-item rdtext18">Documents that detail agreements between the company and its shareholders</li><li class="list-item rdtext18">The latest documents the company has used to explain business proposals to interested investors.</li><li class="list-item rdtext18">A signed letter issued from a company’s Director </li><li class="list-item rdtext18">Any document that the company considers pertinent to SEIS</li><li class="list-item rdtext18">Details of at least one potential investor (this is a recently added requirement)</li></ul><div class="rdtext18">Step 3. Complete the Advance Assurance application online<br/><br/></div><div class="rdtext18">Step 4. Send your application to the HMRC via Email.<br/><br/></div><div class="rdtext18">Step 5. Wait for a response from HMRC.HMRC usually takes four to five weeks to respond with Advanced Assurance confirming whether a company qualifies for SEIS or not.<br/></div></div></div><img src="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/61937c7186c1e958347ca064_Get%20advanced%20assurance%20from%20HMRC.jpg" loading="lazy" sizes="(max-width: 767px) 90vw, (max-width: 991px) 40vw, 30vw" srcset="https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/61937c7186c1e958347ca064_Get%20advanced%20assurance%20from%20HMRC-p-800.jpeg 800w, https://cdn.prod.website-files.com/5bf8086dc176116541ad2553/61937c7186c1e958347ca064_Get%20advanced%20assurance%20from%20HMRC.jpg 1080w" alt="seis-scheme-explained" class="seisimage"/></div><div class="rdsitesection margin80 seiscontainerwithimage"><div class="rdcontainer rdcolumns rdwithig seiswithig"><div class="rdcontainercolumn"><h2 class="b28 left-align">How can investors claim tax relief via the SEIS scheme? <br/></h2><div class="rdtext18">Step 1: Get the SEIS3 form from the company that the investor has invested in.<br/><br/></div><div class="rdtext18">Step 2: The investor can claim on their Self Assessment tax return along with the SEIS3 form.<br/><br/></div><div class="rdtext18">Step 3: Investors have up to 5 years to claim from the time the first investment is made.<br/></div></div></div></div><div class="rdsitesection margin80 seiscontainerwithimage"><div class="rdcontainer rdcolumns rdwithig seiswithig"><div class="rdcontainercolumn"><h2 class="b28 left-align">How to apply for SEIS relief after receiving investment? (Get an SEIS3 authority from HMRC to issue SEIS certificates to your investors)<br/></h2><div class="rdtext18">Step 1. Complete a SEIS1 (SEIS1 is a statement that must be filed with HMRC by the company that wants to issue SEIS scheme shares).<br/>Head to HMRC’s website and complete the compliance statement SEIS1.<br/><br/></div><div class="rdtext18">Step 2. Send the application to HMRC.<br/>Download the form and send it to HMRC via email or agent.<br/><br/></div><div class="rdtext18">Step 3. Get compliance from HMRC.Get your compliance certificates and the HMRC letter. Send completed compliance certificates and SEIS3 to your investors to prove that the investment is SEIS-compliant so they can claim SEIS relief.<br/><br/></div><h2 class="b28">Examples of the SEIS scheme in action:<br/></h2><div class="rdtext18">Example 1<br/>The company performs well and doubles in valueInvestment made = £20,000<br/>Income Tax Relief = £10,000 (Investors can get 50% of their investments back as tax relief)<br/>Profit = £20,000<br/>Capital Gains Tax = £0 (Provided the shares are held for three years)<br/>Tax free return = £30,000<br/><br/>Example 2<br/>Three years have passed, and the company’s value has not changed<br/>Investment = £20,000<br/>Profit from sale = £0<br/>Investor's gain = £10,000 tax relief<br/><br/>Example 3<br/>The company stops trading completely and is out of business<br/>Investment = £20,000<br/>Income Tax Relief = £10,000 (Investors can get 50% of their investment back as tax relief)<br/>Capital at risk = £10,000<br/>Relief on loss made = £4,500 (45% of capital at risk)<br/>Your actual loss = £5,500 (£20,000 – [£10,000 + £4,500])<br/></div></div></div></div><div id="what" class="rdsitesection margin80"><div class="rdcontainer"><h2 class="b28">What type of investors can take advantage of the SEIS scheme?<br/></h2><div class="rdtext18 w-richtext"><p>As per HMRC, the rules for an investor to be able to take advantage of the SEIS scheme are : <br/></p><ul role="list"><li>The investors have to owe taxes in the UK.</li><li>Investors and\or associates must hold less than 30% of the company in share capital.</li><li>Investors must not be a relative of anyone connected with the company, except for siblings who are still eligible. </li><li>Investors must not be business partners of people connected with the company.</li></ul></div></div></div><div class="ctasectionshadow rdsitehomepagebottomcollection"><h3 class="servicessectiontitlesecondary">F6S can help with your SEIS tax relief claim</h3><div class="ctacontainer"><p class="gdpr-text">By providing this personal information, you confirm you agree to us using it to provide our services and to keep in touch regarding information we think may interest you. You also confirm agreement to the <a href="https://www.f6s.com/terms" target="_blank" class="gdpr-link">Terms of Service</a> and <a href="https://www.f6s.com/privacy-policy" target="_blank" class="gdpr-link">Privacy Policy</a>. You can change your mind about receiving information from us as set out in our policies.</p><div class="form-block-4 w-form"><form id="wf-form-RD-Article-Services" name="wf-form-RD-Article-Services" data-name="RD Article (Services)" method="get" class="side-by-side" data-wf-page-id="639c76e7c216ec0c9b2999b2" data-wf-element-id="797d2a97-c51e-8fda-6187-198679d5d037"><input class="ctatextfield w-input" maxlength="256" name="phone-email-2" data-name="Phone Email 2" placeholder="Phone number or email please" type="text" id="phone-email-2" required=""/><input type="submit" data-wait="Please wait..." class="servicescta-3 rdsitecta w-button" value="Get free consult"/></form><div class="success-message-4 w-form-done"><div>We'll get in touch right away<br/></div></div><div class="error-message-2 w-form-fail"><div class="text-block-2 hero">Try again pls, something went wrong</div></div></div></div></div><div class="rdsitesection servicesshadowbuffer"><h2 class="servicessectiontitle">FAQs<br/></h2><div class="sectioncontentcontainer"><div class="servicesaccordioncontainer"><div class="rdaccordionitem"><div class="rdaccordiontitle"><div class="rdexampletitle">How much can I invest in the SEIS scheme?<br/></div></div><div class="rdaccordioncontent"><div class="servicesrichtext w-richtext"><p>As an investor, you can invest up to £200,000 per year in one or more companies under the SEIS scheme.<br/></p></div></div></div><div class="rdaccordionitem"><div class="rdaccordiontitle"><div class="rdexampletitle">What is SEIS carry back?<br/></div></div><div class="rdaccordioncontent"><div class="servicesrichtext w-richtext"><p>If an investor does not use their SEIS allowance for prior years, they are able to apply the prior year(s) SEIS allowance to their current year UK taxes, along with the SEIS allowance for the year in which they are filing the tax return. </p><p>Here is an example:<br/></p><p>In 2023 an investor does not use any SEIS allowance, thus creating a balance of £200,000.</p><p>The same investor in 2024 can use the allowance as a “carry back” along with the allowance of the year 2023, which means a total allowance of £400,000.<br/></p></div></div></div><div class="rdaccordionitem"><div class="rdaccordiontitle"><div class="rdexampletitle">What is SEIS Advance Assurance?<br/></div></div><div class="rdaccordioncontent"><div class="servicesrichtext w-richtext"><p>SEIS Advance Assurance is a confirmation from HMRC that the company can qualify for the SEIS scheme given the information provided. SEIS Advance Assurance helps qualifying companies attract investors that can take advantage of the SEIS scheme.<br/></p></div></div></div><div class="rdaccordionitem"><div class="rdaccordiontitle"><div class="rdexampletitle">What are the key risks involved while investing in the companies that qualify for the SEIS scheme?<br/></div></div><div class="rdaccordioncontent"><div class="servicesrichtext w-richtext"><p>There are significant risks when investing in companies that qualify for the SEIS scheme, namely that such early-stage companies are risky and the investor could lose the entire investment amount in an event like the company winding up, becoming worth less than the amount invested. These investment losses could affect the investor’s portfolio and future returns, although the loss is mitigated to some extent by the tax benefits of the SEIS scheme. However, if the SEIS eligibility of the investment is unclear or lost, this tax relief would not be available to the investor. Additionally, if the investor doesn’t have sufficient UK taxable income to take advantage of the SEIS scheme tax benefits, they will be unable to reduce the risk of the SEIS scheme investment through the SEIS scheme tax benefits.<br/></p><p>Lock-in period for the SEIS scheme investment</p><p>An investor who invests in qualifying SEIS companies will have to ‘lock-in’ their investment and not sell their shares for three years. During this time, an investor will lose the SEIS scheme benefits if they exit their investment, unless a company gets listed on the London stock exchange or all shareholders decide to dilute their shares. <br/></p><p>Uncertainty of SEIS tax benefit</p><p>The SEIS scheme qualification criteria need to be met every year by the company. If the company stops adhering to these criteria, the investors would lose the SEIS tax benefits.<br/></p></div></div></div></div></div></div><div id="what" class="rdsitesection margin80"><div class="rdleadbig"></div></div><footer bind="75c7583f-6f03-d9f5-19ec-0b9fc0d58fbf" class="symbol-footercontainer"><div class="symbol-footerlinks"><div class="symbol-footerlinkcolumn"><div class="symbol-footercolumnheading">R&D Tax Credits</div><a href="https://www.f6s.com/rd-tax-credits-explained" class="symbol-footerlink">R&D Tax Credits Explained</a><a href="https://www.f6s.com/rd-tax-credits-consultants" class="symbol-footerlink">R&D Tax Credits Consultants</a><a href="https://www.f6s.com/rd-tax/faqs" class="symbol-footerlink">R&D Tax Credits FAQs</a></div><div class="symbol-footerlinkcolumn"><div class="symbol-footercolumnheading">SEIS & EIS Tax Relief</div><a href="https://www.f6s.com/eis-scheme-explained" class="symbol-footerlink">EIS Scheme</a><a href="https://www.f6s.com/seis-scheme-explained" class="symbol-footerlink">SEIS Scheme</a><a href="https://www.f6s.com/seis-eis-scheme-for-uk-startups" class="symbol-footerlink">SEIS vs EIS<br/></a></div><div class="symbol-footerlinkcolumn"><div class="symbol-footercolumnheading">SR&ED Tax Credits</div><a href="https://sred.f6s.ca" class="symbol-footerlink">SR&ED Tax Credits Explained</a><a href="https://sred.f6s.ca/sred-calculator" class="symbol-footerlink">SR&ED Calculator</a><a href="https://sred.f6s.ca/sred-consultant" class="symbol-footerlink">SR&ED Consultants</a><a href="https://sred.f6s.ca/faq" class="symbol-footerlink">SR&ED FAQs</a></div><div class="symbol-footerlinkcolumn"><div class="symbol-footercolumnheading">About</div><a href="https://www.f6s.com/f6s" class="symbol-footerlink">About F6S</a><a href="https://www.f6s.com/iot" class="symbol-footerlink">Internet of Things</a><a href="https://www.f6s.com/directory/people" class="symbol-footerlink">Community</a></div></div><div class="symbol-privacylinks"><div class="symbol-privacylinks-links"><a href="https://www.f6s.com/terms" class="symbol-privacy-link">Terms</a><a href="https://www.f6s.com/privacy-policy" class="symbol-privacy-link">Privacy</a><a href="https://www.f6s.com/data-security" class="symbol-privacy-link">Data Security</a><a href="https://www.f6s.com/cookie-policy" class="symbol-privacy-link">Cookie Policy</a><a href="https://www.f6s.com/cookie-table" class="symbol-privacy-link">Cookie Table</a></div><p class="symbol-privacylinks-copyright">©2024 F6S Network Limited. 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