SEIS and EIS tax relief calculator

SEIS and EIS are two separate schemes with the same structure and different generosity. SEIS is for the earliest stage; EIS is for companies slightly further along.

Income tax relief is limited to the income tax you actually owe. It reduces a liability; it does not generate a refund beyond it. An investor with a £20,000 tax bill cannot extract £50,000 of relief however much they invest, though relief can be carried back one tax year.

A £100,000 EIS investment by an additional rate taxpayer.

• Income tax relief at 30%: £30,000. Net cash cost so far £70,000.
• Hold three years and exit at £300,000: the £200,000 gain is free of capital gains tax.
• Or the company fails and the shares become worthless. Loss relief applies to the net cost of £70,000, relieved at the investor's marginal rate of 45% = £31,500.
• Worst case net loss: £100,000 - £30,000 - £31,500 = £38,500.

That downside is the part investors underestimate. A total write-off of £100,000 costs an additional rate taxpayer £38,500 after both reliefs, so roughly 61% of the capital is underwritten by the tax system. It is what makes the risk profile of early stage investing different from ordinary equity, and it is the number worth quoting when you are raising.

SEIS is more generous still: 50% income tax relief, and loss relief on a net cost of £50,000 per £100,000 invested.

The relief belongs to the investor but the compliance sits with the company, and getting it wrong removes the relief retrospectively.

• Advance assurance from HMRC before the raise. Not legally required, but almost every investor asks for it and it is the practical gate.
• Shares must be ordinary, fully paid, and carry no preferential rights to dividends or assets on a winding up. A preference share does not qualify.
• The money must be spent on a qualifying trade within a set period, and the company must have a permanent establishment in the UK.
• SEIS before EIS. A company that issues EIS shares first can no longer use SEIS. The order is not reversible and it is a common and expensive mistake.
• Form SEIS1 or EIS1 after trading begins, which produces the SEIS3 or EIS3 certificates investors need to claim.

• Relief is capped at your income tax liability for the year. This is the single most common disappointment, and it is why the carry back to the previous tax year exists.
• Connected persons do not qualify. An employee, a director in most cases, or anyone holding more than 30% of the company cannot claim relief on their own investment. Founders generally cannot SEIS their own company.
• Selling within three years withdraws the relief, and HMRC reclaims it.
• Some trades are excluded outright, including property development, most financial services, legal and accountancy services, and energy generation benefiting from subsidies.
• The company limits are lifetime limits across all risk finance schemes, and there is an age limit on when a company can first raise.
• Loss relief against income is subject to the general cap on income tax reliefs, which can restrict very large claims.