Resources List
UNDER SEIS Tax Relief
How to qualify for SEIS tax relief
There are a number of requirements for both companies and investors. These regulations are in place to ensure the scheme’s purpose is upheld – to incentivise investors for backing small, early-stage companies with no direct ties to their own financial interests.
SEIS rules for investors
To qualify for SEIS tax relief, you must be a UK taxpayer. Several regulations ensure the scheme functions as intended:
- You cannot be an employee or hold more than 30% of the company's shares.
- Your investment must involve genuine risk; agreements to exchange investments for tax relief or any tax avoidance strategies are not allowed.
- The annual investment limit is £200,000 per investor across SEIS-eligible companies. Additionally, a company can raise a maximum of £250,000 through SEIS over its lifetime.
- Shares must be paid for in full at the time of purchase.
- You must hold the shares for a minimum of three years from the issue date and cannot receive any 'value' from the company during this period.*
*What constitutes as 'value'? An investor is deemed to have received value from the company if:
- The company repays, redeems, or repurchases any of its shares owned by the investor.
- The company settles a debt owed to the investor.
- The company offers any benefit or facility to the investor.
If you are uncertain whether you have received 'value' from the company, refer to HMRC's guidelines on this matter.
Which businesses qualify for investment under the SEIS?
The SEIS programme incentivises investors who back small, early-stage startups. For a company to qualify for SEIS, it must:
- Have been operating for under three years
- Have a workforce of fewer than 25 employees
- Possess gross assets not exceeding £350,000
- Maintain a permanent establishment in the UK
- Not engage in excluded trades, such as banking, insurance, or property development.
Did you know businesses can secure pre-approval for SEIS?
If you're certain you want to invest in startups eligible for SEIS, seek out companies with SEIS Advance Assurance. While this does not guarantee compliance with SEIS regulations, it provides added reassurance that, barring any changes, you are likely to receive the SEIS tax benefits. This assurance is a key element of your due diligence.