For UK founders raising their first round of equity, the Seed Enterprise Investment Scheme (SEIS) is one of the most generous tax incentives in the developed world. Investors can claim 50% income tax relief on up to £200,000 of investment per tax year, plus full Capital Gains Tax exemption on a successful exit.
SEIS (Seed Enterprise Investment Scheme) is the most generous UK tax incentive for early-stage investors — 50% income tax relief on investments up to £200,000 per tax year (raised from £100,000 in 2023), plus CGT exemption on gains and 50% reinvestment relief. The investee company must have under £350,000 gross assets and fewer than 25 employees, and have traded for less than 3 years.
While the Autumn 2025 Budget left SEIS limits unchanged — the spotlight fell on EIS and EMI instead — the regime is still the cornerstone of early-stage UK fundraising for 2026/27. This guide explains how it works and how to use it well.
📈 SEIS at a Glance — 2026/27
- 50% income tax relief for investors — halves the effective cost of the investment
- £250,000 maximum company lifetime SEIS raise
- £200,000 annual investor limit
- No change from 2025/26 — limits unchanged by Autumn 2025 Budget
- Most companies use SEIS first, then graduate to EIS for follow-on rounds
What Is SEIS?
SEIS is a UK government scheme designed for the very earliest stage of a company's life — typically pre-revenue or pre-product-market-fit. It offers investors more generous reliefs than EIS to compensate for the higher risk of backing brand-new ventures.
Most companies use SEIS first, then graduate to EIS for larger follow-on rounds. The two schemes can be used in sequence on the same cap table, though never simultaneously on the same investment — SEIS must always be issued first.
SEIS Tax Reliefs in 2026/27
🆕 Five Tax Reliefs Available to SEIS Investors
- 50% Income Tax Relief: on investments up to £200,000 per tax year — a £100,000 SEIS investment costs the investor only £50,000 net of income tax relief
- CGT exemption: any gain on SEIS shares held for at least three years is completely free of Capital Gains Tax
- CGT reinvestment relief: 50% of any capital gain reinvested in SEIS-qualifying shares can be exempted from CGT — useful for investors with recent gains elsewhere
- Loss relief: if the company fails, losses (net of income tax relief) can be set against income or gains. Combined with the 50% upfront relief, maximum downside for a higher-rate taxpayer is approximately 27.5p in the pound
- IHT relief: SEIS shares typically qualify for 100% Business Property Relief after two years — subject to the new £1m BPR cap from April 2026
To illustrate the combined effect: a higher-rate taxpayer investing £100,000 in SEIS receives £50,000 income tax relief immediately, reducing their net cost to £50,000. If the company fails entirely, loss relief at 40% on the remaining £50,000 recovers a further £20,000. Worst-case total loss: £30,000 on a £100,000 investment — less than a third.
Company Limits in 2026/27
| SEIS Limit | Threshold 2026/27 |
|---|---|
| Maximum SEIS funds raised (lifetime) | £250,000 |
| Maximum gross assets at share issue | £350,000 |
| Maximum full-time equivalent employees | Fewer than 25 |
| Company age (from first commercial sale) | Less than 3 years |
| Annual investor income tax relief limit | £200,000 per investor |
These are the limits that applied from April 2023 and remain in force for 2026/27. The Autumn 2025 Budget did not change them — all the scheme changes announced focused on EIS and EMI.
Raising Pre-Seed via SEIS?
SEIS advance assurance, SEIS1 compliance statements and SEIS3 certificates.
Qualifying Conditions for Companies
To issue SEIS-eligible shares, the company must:
- Be UK-based with a permanent establishment in the UK
- Be carrying on (or preparing to carry on) a qualifying new trade — most trades qualify, but property development, financial services, legal services, farming, hotels and others are excluded
- Have less than three years of trade history when SEIS shares are issued
- Have gross assets not exceeding £350,000 immediately before the share issue
- Have fewer than 25 full-time equivalent employees
- Not be controlled by another company — no parent-subsidiary structures
- Spend SEIS funds on a qualifying business activity within three years
⚠️ Three-Year Clock Is Critical
The three-year trading history limit is one of the most commonly missed SEIS conditions. If your company has been actively trading for more than three years, it is too late to issue SEIS shares — even if all other conditions are met. Don't delay your raise.
Qualifying Conditions for Investors
- Must be a UK taxpayer — relief is limited to the investor's UK income tax liability
- Must not hold more than 30% of the company's shares (counting connected parties)
- May be a director of the company — unlike EIS, SEIS permits directors to invest (but not employees)
- Must hold shares for at least three years to retain income tax relief and CGT exemption
👥 SEIS vs EIS: Key Differences
- Relief rate: SEIS 50% vs EIS 30% — SEIS is more generous
- Company stage: SEIS for early-stage (<3 years trading); EIS for more established growth companies
- Company cap: SEIS £250,000 lifetime; EIS £10 million per year (from April 2026)
- Directors can invest: Yes under SEIS; No under EIS (paid directors excluded)
- Order: SEIS must always be issued before EIS on the same cap table
The SEIS Process: Advance Assurance to SEIS3
📋 Four Steps to a Compliant SEIS Round
- Step 1 — Advance Assurance: submit a pre-application to HMRC describing the company, business plan, and share structure. Most investors will not commit without it. Allow 6–12 weeks.
- Step 2 — Issue SEIS shares: issue qualifying ordinary shares (no preferential rights) and receive the funds.
- Step 3 — Submit form SEIS1: the compliance statement, filed once you have been trading for at least four months or have spent at least 70% of the SEIS funds raised.
- Step 4 — Receive SEIS2 and SEIS3 certificates: HMRC issues SEIS2 to the company and SEIS3 certificates to each investor — investors use the SEIS3 to claim their tax relief via self-assessment.
Common SEIS Mistakes to Avoid
❌ Six Costly SEIS Errors
- Issuing shares before Advance Assurance — and then finding a shareholders' agreement clause disqualifies the round
- Letting the company drift past three years of trading before issuing SEIS shares — the window closes permanently
- Issuing shares with preferential dividend rights or anti-dilution mechanisms — these commonly fail the 'ordinary shares' test
- Returning capital to investors within three years of the SEIS investment — triggers withdrawal of relief
- Mixing SEIS and EIS in the same round in a way that breaches the order rule — SEIS must be issued first
- Poor documentation of fund use — HMRC enquiries focus heavily on whether money was spent on the qualifying activity within three years
✅ Key Takeaways — SEIS in 2026/27
- SEIS is unchanged in 2026/27 — £250,000 company cap, £200,000 investor allowance, 50% income tax relief
- Use SEIS first, then EIS for follow-on rounds — never the other way around
- Get Advance Assurance before talking to angels — most won't sign a term sheet without it
- Plan the cap table carefully — preferential rights or anti-dilution clauses commonly used in venture deals can disqualify SEIS
- The three-year trading window is a hard deadline — if you're approaching it, raise now
- Document use of funds — HMRC enquiries focus on this as the primary compliance test
Frequently Asked Questions
What is the SEIS relief for investors in 2026/27?
SEIS investors receive 50% income tax relief on investments up to £200,000 per tax year, full CGT exemption on gains after 3 years, 50% CGT reinvestment relief, loss relief if the company fails, and IHT relief through BPR after 2 years.
What is the SEIS company limit in 2026/27?
A company can raise a maximum of £250,000 lifetime through SEIS. The company must have gross assets under £350,000, fewer than 25 full-time employees, and be within 3 years of first commercial sale at the time of share issue.
Can a company use both SEIS and EIS?
Yes — most companies use SEIS first for the earliest round, then graduate to EIS for larger follow-on raises. SEIS must be issued first. The two schemes can never be used simultaneously on the same investment in the same round.
📚 Related reading
- Setting Up a UK Charity 2026 — Some founders pursue charitable structures alongside trading companies — particularly tech-for-good ventures.
- Sole Trader Setup Guide 2026/27 — If your business is too early-stage for SEIS, sole trader is often the cleaner starting point.
Shamim works with early-stage UK founders on SEIS, EIS, EMI and the wider tax landscape. He holds the CTA — the UK's highest tax qualification — and has guided numerous founders through Advance Assurance, compliant share structures and follow-on EIS rounds.
Building a tech or software business?
Once you reach growth-stage (£1m+ revenue), our Technology & Software specialism takes over: R&D claims, EMI scheme design, US-UK structuring. Tax-led, not bookkeeping-led.