£50,000 A Year Tax Relief: What Are SEIS Investments?

The Seed Enterprise Investment Scheme (SEIS) is an investment scheme created by the UK government which provides certain forms of tax relief.

Read on for a quick guide to SEIS investments, EIS, and more details on the types of tax relief available.

Before SEIS, came the Enterprise Investment Scheme (EIS), launched back in 1994 to encourage investors to make investments in smaller unlisted companies that would otherwise be considered as high risk.

Even before the EIS was the Business Startup Scheme (BES), launched in 1981.

A lot has changed since then, so without going too far back let’s take a quick look over EIS, as this is the larger part of the market.

£50,000 A Year Tax Relief: What Are SEIS Investments?

The Enterprise Investment Scheme allows investors to invest up to £1,000,000, which can then be offset against various forms of tax, subject to particular rules and restrictions.

Of this £1,000,000, at present HMRC currently allows 30% tax relief of Income Tax – which means up to £300,000 of the investment can be offset against Income Tax.

The investment is also exempt from Capital Gains and Inheritance Tax.

Fast forward to 2012, with the government launching the Seed Enterprise Investment Scheme

Although the business climate is very different to 1981, the ideas behind the scheme are still broadly similar – in that it is designed to encourage investment in small businesses.

Where SEIS is notably different to EIS for example, is that SEIS allows investors to claim a full 50% tax relief on Income Tax for their investment.

The maximum amount that can be invested currently stands at £100,000 – which means the scheme is a little smaller, but has a greater ROI in terms of the percentage of tax relief.

After three years an investor may then sell their stake, incurring no Capital Gains tax against the profit achieved.


We have made a quick visualisation of EIS vs SEIS that you can view below:

EIS vs SEIS

Graph by DumbFunded.co.uk


There is also the benefit that if you decide to invest in an EIS or SEIS you are contributing to small business and startup growth in the UK, allowing new ideas and entrepreneurs to succeed.

At Dumb Funded we definitely think that it is worth looking into the EIS or SEIS scheme if you have the money available.

With any investment there is always risk, hence the purpose of the scheme, so as ever you should be careful and only invest what you can afford. That said they could potentially make an interesting supplement to a pension.

This article contained some technical stuff that we had to check with an expert – so big thanks to KuberVentures.co.uk for the help and for responding to our #Journorequest on Twitter.

Please note, this article is not financial advice, and you should always speak to a finance professional before making any decision.


Have you invested in an EIS or SEIS? Or do you have a question or comment? Leave a message in the box below and we will try to get back to you.

Main image and 2nd image source: Number 10 @ Flickr via CC 2.0. “EIS vs SEIS” graph by DumbFunded.co.uk, use with credit.

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