When can you claim SEIS loss relief?

If a company is not profitable and struggles to secure further funding, founders typically face three options: sell the company, enter a "zombie mode" (ceasing all activity and expenditure), or shut down. Each path impacts your ability to claim loss relief.

Scenario: The company is sold

Is Loss Relief Available?

Yes, you can claim loss relief if you receive less for your shares than your initial investment.

However: if the company is sold within three years of your investment, you will forfeit the original SEIS/EIS tax deduction, but you can still claim loss relief when selling shares at a loss. More information is available on the HMRC website.

Conditions:

• As an SEIS/EIS investor, you qualify for loss relief if your sale price is lower than what you paid.
• The relief amount depends on the Income Tax relief you received when purchasing the shares and whether HMRC has withdrawn any of that relief.
• There are no minimum or maximum holding periods for your shares.

Scenario: The company goes into zombie mode

Is Loss Relief Available?

No, because you still hold the shares and nothing has been sold.

However: You may be able to make a negligible value claim, allowing you to declare a loss even if you still own the shares.

Scenario: The company shuts down (voluntary liquidation)

Is Loss Relief Available?

Yes.

Conditions:

• As an SEIS/EIS investor, you may be eligible for loss relief if the company is voluntarily wound up for legitimate commercial reasons.
• The relief amount depends on the Income Tax relief you received when you bought the shares and whether HMRC has withdrawn any of that relief.
• There are no minimum or maximum holding periods for your shares.