Seed Enterprise Investment Scheme

What Is SEIS?

SEIS supports very early-stage UK trading companies by offering substantial tax incentives to individual investors who subscribe for newly issued shares.

The scheme aims to reduce investor risk while helping young companies access the capital they need to innovate and expand.

Key Tax Reliefs Available

Income Tax Relief

Investors may qualify for income tax relief of up to 50% of the amount invested in qualifying SEIS shares. This relief can be claimed against your income tax liability for the year in which the investment is made.

For example, an investment of £10,000 in qualifying SEIS shares could generate up to £5,000 of income tax relief in the same tax year.

Capital Gains Tax (CGT) Exemption

After holding SEIS shares for the required minimum period (typically three years), any gain on disposal of those shares may be exempt from Capital Gains Tax, provided the conditions of the scheme are met.

Loss Relief

If the investment results in a loss, SEIS offers further protection through loss relief. This allows you to offset the net loss (after income tax relief) against your taxable income or capital gains, which can reduce your overall tax liability.

Eligibility for Companies

To attract SEIS investment, a company must meet a number of qualifying conditions at the time the shares are issued, including:

• Being a UK-based trading company

• Having gross assets below a defined threshold before investment

• Employing fewer than a specified number of full-time employees

• Using the funds raised for growth or development activities

• Not having previously carried on a different trade for more than a defined period

SEIS is not available for companies whose principal activities are investment, property holding, or leasing rather than trading.

Eligibility for Investors

To qualify for SEIS reliefs an investor must:

• Be an individual (not a company)

• Acquire newly issued shares for cash

• Hold the shares for at least the minimum qualifying period (usually three years)

• Not be connected to the company beyond the investment itself (certain exceptions apply)

If shares are sold or company circumstances change before the end of the qualifying period, reliefs may be reduced or withdrawn.

Lifetime Limits and Investment Caps

SEIS reliefs are subject to annual investment limits:

• There is a maximum amount an individual can invest in SEIS qualifying companies in a single tax year and still claim relief

• There are also limits on the total amount a company can raise under SEIS

These limits are designed to target reliefs toward genuine seed-stage investments.

Important Planning Considerations

Timing Is Critical

Correct structuring of the investment and timely submission of compliance documentation are essential to ensure that SEIS tax reliefs are secured.

Record Keeping

Both the company and the investor must retain accurate records, including share certificates, compliance statements, and evidence of how funds were used.

Risk Awareness

Investing in early-stage companies carries commercial risk. SEIS reliefs help mitigate tax risk, but they do not remove the risk of a loss on the investment itself.

How Applegrow Can Help

SEIS involves detailed conditions and specific compliance requirements. Mistakes can cause your tax benefits to be reduced or denied.

Applegrow can help you:

• Assess whether your business qualifies for SEIS

• Structure SEIS-eligible investment rounds

• Advise individual investors on tax relief opportunities

• Prepare and check documentation for compliance

• Integrate SEIS planning with wider business and tax strategies

Whether you are a start-up seeking investment or an individual considering SEIS relief, Applegrow provides clear, practical guidance to support your decisions.