--- title: "SEIS for investors: Deduct up to 50% of your next investment from your UK income tax" id: "1901" type: "post" slug: "seis-rules-investors" published_at: "2019-06-13T14:22:29+00:00" modified_at: "2026-02-13T13:00:00+00:00" url: "https://seedlegals.com/resources/seis-rules-investors/" markdown_url: "https://seedlegals.com/resources/seis-rules-investors.md" excerpt: "Invest in SEIS eligible companies to get generous tax relief. We set out the rules and benefits for investors." taxonomy_category: - "SEIS EIS" - "Investor Hub" --- 5 min read Expert reviewed This article has been fact-checked by a SeedLegals subject matter expert. [Meet our experts](https://seedlegals.com/authors-and-experts/) and learn more about our review process and quality assurance in our [editorial policy](https://seedlegals.com/editorial-policy/) . # SEIS for investors: Deduct up to 50% of your next investment from your UK income tax Published: Jun 13, 2019 Updated: Feb 13, 2026 Contents [Watch video: SEIS for investors](#watch-video-seis-for-investors) [What are the benefits of SEIS for investors?](#what-are-the-benefits-of-seis-for-investors) [What are the rules of SEIS for investors?](#what-are-the-rules-of-seis-for-investors) [SeedLegals for Investors](#seedlegals-for-investors) [CopywriterKaylin SullivanSenior Copywriter](https://seedlegals.com/resources/author/kaylin/) [Expert contributorZlatina TrifonovaCX Associate - Funding Rounds](https://seedlegals.com/resources/author/zlatina-trifonova/) [Expert contributorAnthony RoseCo-Founder and CEO](https://seedlegals.com/resources/author/anthony/) Thinking of investing in a high-risk startup? Good news – you might be entitled to certain some tax reliefs if you do. The UK government created the Seed Enterprise Investment Scheme (SEIS) to encourage investors to invest in high-risk startups. When you invest in an SEIS-eligible startup, you can deduct 50% of the amount of your investment from the amount of Income Tax you pay this tax year or last tax year. And you won’t pay Capital Gains Tax on any profits if you hold your shares for at least three years. In this article, we explain the SEIS benefits and rules so you can better understand whether you could claim tax relief for your investment. To learn more about how the scheme works, read our comprehensive guide: [SEIS: guide to the Seed Enterprise Management Scheme](https://seedlegals.com/resources/seis/) ### Contents - [📺 Watch video: SEIS for investors](#video) - [What are the benefits of SEIS for investors?](#seis-benefits) - [What are the rules of SEIS for investors?](#seis-rules) ## Watch video: SEIS for investors SeedLegals CEO Anthony Rose explains how the Seed Enterprise Investment Scheme can benefit investors: ## What are the benefits of SEIS for investors? The SEIS benefits for investors include various types of tax relief. We’ve covered them all below. ### **Income Tax relief** - Up to 50% Income Tax relief. For example, if you make an investment of £10,000 that qualifies for SEIS, you can claim an Income Tax reduction of £5,000 ### **Capital Gains Tax relief** - No CGT on any gains from the SEIS investment, as long as shares are held for at least 3 years - 50% Capital Gains Tax (CGT) relief on gains from an investment in a non-SEIS company, if the gains are reinvested into an SEIS-eligible company ### **Loss relief** - If a business doesn’t do well and you end up selling your SEIS shares at a loss, you can claim SEIS loss relief – there’s more about this in our post, [SEIS loss relief](https://seedlegals.com/resources/eis-seis-loss-relief/) ### **Inheritance Tax relief** - There’s no Inheritance Tax on SEIS shares as long as they are held for at least 2 years Tax relief can be carried back to the previous tax year, as long as you haven’t already invested the maximum you're allowed under SEIS in that year (The maximum is £250,000). This means you can opt for all or part of your SEIS shares acquired in the current tax year to be treated as though they had been acquired in the previous one. ## What are the rules of SEIS for investors? For your investment to qualify for SEIS tax relief, you have to adhere to a set of SEIS rules: **1. The company must be eligible** First and foremost, the company you invest in must be eligible for SEIS for you to claim tax benefits. To be eligible for SEIS, a company must meet certain criteria, such as being a UK-based company, having fewer than 25 employees and £350,000 or less in gross assets (read the full criteria in our [Guide to SEIS](https://seedlegals.com/resources/seis/) ). Make sure you check that the company you’re considering investing in meets these criteria before investing – ask if they have [Advance Assurance](https://seedlegals.com/start/seis-eis/) . > Advance Assurance gives you the security you need to make an investment and know that the company you’re investing in meets the eligibility criteria of the SEIS scheme. This is a very important element of your due diligence – investing in companies without Advance Assurance puts you at risk of not getting the tax relief. > > [Zlatina Trifonova](https://seedlegals.com/resources/author/zlatina-trifonova/) > SEIS/EIS Specialist, > > [SeedLegals](https://seedlegals.com) **2. You must be liable for UK Income Tax** You don’t need to be a UK resident to claim SEIS, but to claim Income Tax relief, you must have income which is liable for UK Income Tax. **3. You can’t be an employee of the company you’re investing in – but you can be a paid director** You and any of your associates must not be an employee of the company between the date the shares are issued until three years later, on the third anniversary of that share issue. However, you can be a director, and receive reasonable compensation for this position. To understand more about this, read [SEIS/EIS rules for investor directors](https://help.seedlegals.com/en/4476764-seis-eis-rules-for-investor-directors) . **What is an ‘associate’?** An associate includes business partners, trustees, and relatives (spouses, civil partners, parents, children, etc.). Brothers and sisters are not considered associates for SEIS purposes. Read the full details in [HMRC’s Venture Capital Schemes Manual.](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm11070) **3. No substantial interest in the company** You must not have any ‘substantial interest’ in the company you’re investing in, at any time from the incorporation of the company until the third anniversary of the date of the share issue. **What is ‘substantial interest’?** If an investor directly or indirectly possesses or is entitled to acquire more than 30% stake in the company, this is classed as a substantial interest. The 30% includes shareholdings of associates. **4. No related investment arrangements** You won’t qualify for SEIS relief if you’ve subscribed for the shares as part of a reciprocal arrangement. For example, if you make an agreement with the owner of Startup A to invest in Startup B through SEIS in exchange for their investment in Startup A, you’d be disqualified from claiming your SEIS relief. **5. No linked loans** No loans should be made to you or your associates which are linked to the company you’re investing in. This applies from the date of incorporation of the company until the third anniversary date of the shares were issued. ### Manage deals seamlessly Negotiate and sign deals, download your SEIS relief certificates and manage your portfolio - all on one platform. [Learn more](https://seedlegals.com/investors/) **6. No tax avoidance** To be eligible for SEIS relief, an investment must be made for genuine commercial reasons and not as part of a scheme or arrangement intended to avoid tax. **7. Your investment must be less than £200K** From April 2023, you can invest a maximum of £200,000 per year for SEIS in exchange for a 50% tax break and a Capital Gains Tax exemption on any profits you make from the sale of shares after three years. You can [carry back your tax relief](#carry-back) to the previous year. **8. You must keep the shares for at least three years** If you sell or dispose of your shares in a company before the third anniversary of your share issue, your SEIS relief can be withdrawn or reduced. You must hold your shares for a minimum of three years to receive the full SEIS tax benefits. If you transfer the shares to a spouse or civil partner, it doesn’t count as disposal for SEIS. **9. You must pay for your shares upfront** To receive the full SEIS tax benefits, you must pay for your shares upfront in full and the shares issued must be ordinary shares. **10. You must not receive value from the company for three years** Your SEIS relief could be withdrawn or reduced if you receive**value** from the company or from a person connected with that company at any time from the incorporation of the company to the third anniversary of the share issue date. An investor is considered to have received **value** from the company if: 1. the company repays, redeems or repurchases any of its share capital belonging to the investor 2. the company repays a debt owed to the investor 3. the company provides a benefit or facility to the investor If you’re not sure about whether you have received ‘value’ from the company, read [HMRC's guidelines on value](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm36070) **11. No put option or call option for three years** Your SEIS relief could be withdrawn or reduced if there’s a **put option** or **call option** over the shares at any time before the third anniversary of the date the shares are issued. Read the definition of put and call options in [HMRC’s tax manual](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12301#:~:text=A%20PUT%20OPTION%20is%20an,binding%20the%20grantor%20to%20sell.) . These are all the SEIS rules for investors. If you still have questions about SEIS rules and benefits for investors, [book a call](https://seedlegals.com/meetings/investor-interest/) with one of our experts and we’ll get them answered fast. ## SeedLegals for Investors Want to work smarter and manage your deals seamlessly? We can help you: - [Negotiate and carry out deals](https://seedlegals.com/investors/deal-manager/) on one easy-to-use platform - Download [S/EIS tax relief](https://seedlegals.com/investors/investor-seis/) certificates - See up-to-date [shareholding](https://seedlegals.com/investors/exit-modelling/) across your investments Learn more about our [tools for investors](https://seedlegals.com/investors/) . - Article Sources 1. [Capital Gain Manual | HMRC](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12301#:~:text=A%20PUT%20OPTION%20is%20an,binding%20the%20grantor%20to%20sell.) – accessed 13 March 2023 2. [Venture Capital Manual | HMRC](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm11070) -accessed 13 March 2023 ## Related posts [4 min readSEIS and EIS loss relief: What is it and how can your investors claim it?Startup not working out? Haven’t been able to raise investment? Here’s how to make sure the SEIS/EIS investors who’ve su... Suzanne Worthington](https://seedlegals.com/resources/eis-seis-loss-relief/) [11 min readSEIS: Guide to the Seed Enterprise Investment SchemeFounders guide to SEIS. Find out how it helps startups and investors, eligibility criteria, how to get Advance Assurance... Suzanne Worthington](https://seedlegals.com/resources/seis/) [3 min readSeedLegals Deal Manager: send your next investment proposal easilyDeal Manager is the fastest and easiest way to create investment proposals, negotiate deal terms and close funding round... 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