A UK company can raise up to £250,000 under the Seed Enterprise Investment Scheme (SEIS), and its investors can claim 50% income tax relief on up to £200,000 each per tax year (HMRC guidance for companies and investors). To qualify, the company must pass tests on the age of its trade, its gross assets, its headcount and its independence when the shares are issued, and it must file a compliance statement before any investor can claim.
These are the rules as at 9 October 2026, for the 2026 to 2027 tax year. The SEIS limits are the ones set in April 2023; the increases that took effect on 6 April 2026 applied to EIS and venture capital trusts, not to SEIS (HMRC policy paper, 26 November 2025).
The company tests
According to HMRC’s guidance, your company can use SEIS if it:
- carries on a new qualifying trade that neither it nor anyone who transferred the trade to it has carried on for more than three years;
- has not carried on any other trade before the new one;
- is established in the UK;
- is not trading on a recognised stock exchange and has no arrangements to become a quoted company or the subsidiary of one;
- has not been controlled by another company since incorporation, and controls no company other than a qualifying subsidiary;
- is not a member of a partnership;
- has not received investment through the Enterprise Investment Scheme (EIS) or from a venture capital trust (VCT).
The numerical limits sit alongside those conditions.
| Test | Limit for 2026 to 2027 | When it applies | Source |
|---|---|---|---|
| Total raised under SEIS | £250,000, including other de minimis state aid received in the three years up to and including the investment | At each share issue | HMRC; ITA 2007 s257DL |
| Gross assets | No more than £350,000 for the company and its subsidiaries | Immediately before the shares are issued | ITA 2007 s257DI |
| Staff | Fewer than 25 full-time equivalent employees; directors count | When the shares are issued | ITA 2007 s257DJ |
| Age of the trade | Carried on for no more than three years | At the share issue | HMRC |
| EIS or VCT money | None made on or before the day the SEIS shares are issued | At each share issue | ITA 2007 s257DK |
| Use of the money | Spent on the qualifying trade, preparing for it, or related research and development | Within three years of the share issue | HMRC |
| Investor relief | 50% income tax relief on up to £200,000 a tax year | Per investor | HMRC |
| Investor stake | No more than 30% with associates; employees excluded, directors can qualify | From incorporation and through the three years after the investment | HMRC |
Some trades are excluded. HMRC says a company may not qualify if more than 20% of its trade involves activities such as property development, legal or financial services, leasing, running a hotel or nursing home, farming or energy generation (HMRC). The full list is in HMRC’s manual.
There is also a principles-based test, the risk to capital condition. The company must intend to grow and develop its trade over the long term, and the investment must carry a risk that investors lose more capital than they are likely to gain as a net return, with upfront tax relief counted as part of that return. Arrangements that give investors priority, a quick way out or protection from loss fail the test (HMRC).
The shares and the money
SEIS shares must be full-risk ordinary shares that are not redeemable and carry no special rights to the company’s assets. Limited preferential dividend rights are allowed, but dividends cannot accumulate or be varied. The shares must be paid for in full, in cash, when they are issued, so the company needs a way to receive money before the issue. There can be no arrangement to guarantee the investment, to sell the shares during or at the end of the investment period, or for reciprocal investment (HMRC).
Taking money before the shares exist is possible through an advance subscription agreement (ASA), on HMRC’s terms: no refund in any circumstances, no interest, no variation, cancellation or assignment, and a longstop date for issuing the shares that HMRC generally expects to be no more than six months away (VCM33025). A convertible loan note is a different instrument and generally does not work for SEIS; our explainer on CLNs and ASAs sets out why.
The money must be spent within three years of the share issue on the qualifying trade, on preparing to carry it on, or on research and development expected to lead to it. It cannot be used to buy shares, except in a qualifying 90% subsidiary that uses the money for a qualifying business activity (HMRC).
SEIS first, then EIS
Order matters. The law requires that no EIS or VCT investment has been made “on or before the day on which the relevant shares are issued” (Income Tax Act 2007, s257DK), so SEIS shares must be issued on an earlier day than any EIS shares. HMRC’s EIS guidance puts it plainly: once shares are issued under EIS, the company cannot issue shares under SEIS (HMRC).
SEIS money also counts towards the EIS limits. From 6 April 2026 most companies can raise up to £10m in any 12 months and £24m in their lifetime from EIS, VCTs, SEIS and certain state aid, and EIS gross assets must be no more than £30m before an issue and £35m immediately after (HMRC). An old rule requiring 70% of SEIS money to be spent before EIS shares could be issued was withdrawn for shares issued on or after 6 April 2015 (VCM12040). Our sister title SEIS Investments explains how SEIS and EIS fit together, and our SEIS, EIS and VCT comparison sets out the investor side.
Advance assurance
Advance assurance is optional. It is HMRC’s opinion, before you issue shares, that the investment looks likely to qualify; you can issue shares without it, but you cannot apply once the shares are issued (VCM60010).
HMRC asks for the amount you plan to raise, your business plan and financial forecasts, the latest accounts if available, current articles of association, any agreements with shareholders, the draft documents you will show investors, your register of members and how much you expect to spend on each activity (HMRC). If you have not used a venture capital scheme before, you must name prospective investors with their intended amounts, or show that a fund manager or crowdfunding platform has agreed to work with you (VCM60230).
The assurance only holds if you disclosed everything relevant and nothing material changes. Our sister title has a founder’s guide to advance assurance, and our investor-side explainer shows what your investors are likely to ask to see.
After the round: SEIS1 and SEIS3
- Issue the shares. Shares are normally issued when the holding is entered in the register of members (VCM33020).
- Wait until you can file. The SEIS1 compliance statement can be submitted only once the company, or a qualifying 90% subsidiary, has carried on the new qualifying trade for at least four months or spent at least 70% of the money raised by that issue.
- File one SEIS1 per share issue, listing the investors who want certificates. If you had advance assurance, send copies of any documents that have changed since.
- HMRC reviews it. If satisfied, it sends a letter of authorisation with a unique investment reference and the SEIS3 compliance certificate. If not, it explains why and how to appeal.
- Issue SEIS3 certificates to each investor listed, with the reference included. Investors need both to claim.
- Keep to the rules for three years. If the company does not, its investors’ relief is withheld or withdrawn.
Steps two to six are set out in HMRC’s SEIS guidance and its guidance for investors. A company that provides a compliance statement or certificate fraudulently or negligently is liable to a penalty of up to £3,000 (Income Tax Act 2007, s257EF).
Promoting the round
Inviting people to invest is a financial promotion. Under section 21 of the Financial Services and Markets Act 2000, a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless they are an authorised person or the content is approved by one, subject to exemptions set by the Treasury. Authorised platforms that promote unlisted shares to the public must also apply the FCA’s high-risk investment rules, including prescribed risk warnings, a 24-hour cooling-off period for new customers and an appropriateness test (FCA Handbook, COBS 4.12A). Check how the rules apply to your round, with legal advice if needed, before you market it.
Where to go next
Our sister title SEIS Investments has a founder hub, an eligibility checklist, the SEIS Compass, a free questionnaire that produces a readiness report, and a guide to the document pack investors expect. For how investors weigh SEIS, see SEIS for investors.
