EIS & SEIS Tax Relief 2026/27 | Income Tax, CGT & Loss Relief

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) offer tax reliefs to investors in qualifying companies: 30% Income Tax relief on eligible EIS subscriptions and 50% on eligible SEIS subscriptions. For 2026/27, the EIS investor claim limit is generally £1 million, or up to £2 million where the excess is invested in qualifying knowledge-intensive companies; the SEIS limit is £200,000. Other reliefs may include CGT deferral, CGT exemption on qualifying disposals, loss relief and Business Relief, but each has separate conditions.

The reliefs are limited by the Income Tax you have available for the year to which the claim is allocated, and the conditions — new shares, unconnected investor, three-year holding — are strict. A valid claim can sometimes be allocated to the previous tax year, so “no refund” is too broad: a carry-back can reduce an earlier liability and produce a repayment where the earlier-year conditions are met. Model EIS and SEIS against other options with the EIS/SEIS Calculator→, and compare with ISA investing using the ISA Calculator→.

The Reliefs at a Glance

EIS relief is capped at your income tax liability for the year — it cannot create a refund — while SEIS relief can be carried back to the previous year, making it genuinely refundable in some cases. A £50,000 EIS investment reduces a £50,000 tax bill by £15,000; a £50,000 SEIS investment reduces it by £25,000. For higher-rate and additional-rate taxpayers the effective cost of the investment falls correspondingly.

Income Tax Relief in Practice

The shares must be new shares subscribed for cash, and the investor must satisfy the scheme’s connection and value-received rules. You normally need to hold the shares for three years from issue, subject to the statutory timing rules, or relief can be withdrawn. A company may seek Advance Assurance from HMRC, but it only covers the conditions HMRC can assess from the information supplied; it is not a guarantee that the investor will qualify.

CGT Deferral and Exemption

EIS can defer a qualifying capital gain reinvested into EIS shares. The gain is deferred, not cancelled, and the detailed chargeable-event and estate rules must be checked when the shares are disposed of or the investor dies. SEIS can provide relief for 50% of a qualifying reinvested gain, subject to its conditions. On top of both, gains on qualifying EIS or SEIS shares themselves can be exempt after the required three-year holding period.

Loss Relief and Business Property Relief

If the company fails, you may be able to claim loss relief on the net cost after Income Tax relief already received. The loss can be set against capital gains, or an election may allow it to be set against income in the year of disposal or the previous year, subject to the rules and time limits. For an additional-rate taxpayer, the £10,000 illustration below assumes £3,000 of EIS relief, a £7,000 allowable loss and a 45% income-tax relief rate; it is not a guaranteed outcome. After the relevant two-year ownership period, qualifying EIS or SEIS shares may qualify for Business Relief, but the 2026/27 Business Relief cap and percentage rules mean this is not an unconditional 100% inheritance-tax exemption.

Key Conditions and Restrictions

• New shares only — you must subscribe for newly issued shares; buying existing shares from another investor qualifies for nothing.
• Cash consideration — the investment must be in cash, not assets or services.
• Connection and trade rules — you must meet the scheme’s detailed connection, employment, value-received and qualifying-trade conditions; do not reduce them to a single ownership percentage or residence test.
• Three-year holding — sell within three years and the relief is clawed back.
• No pre-arranged exits — the investment must be for genuine growth, not a scheme to manufacture relief.

These conditions are policed through the EIS3/SEIS3 certificate and HMRC's compliance checks. A company that later becomes non-qualifying, or an investor who breaches the connection rules, faces full withdrawal of relief plus interest. Advance Assurance from HMRC de-risks the company side; the investor-side conditions remain your responsibility.

EIS Funds vs Direct Investment

You can invest directly in individual companies or through an EIS fund. Direct investment concentrates risk; a fund may spread the investment across qualifying companies but will have its own fees, liquidity, eligibility and exit terms. Check the fund documents rather than assuming a number of holdings, fee level or exit timetable.

Carry-Back and Claim Timing

EIS and SEIS relief can both be allocated to the previous tax year under HMRC's claim rules, subject to the scheme limits, the certificate and the available Income Tax liability in the year selected. This is different from carrying unused relief forward: HMRC says unused Income Tax relief cannot be carried forward to a later year. The practical choice is therefore between the year of issue and the immediately preceding year, not an open-ended timing option.

For example, an eligible EIS investment issued in 2026/27 may be claimed in 2026/27 or, if the conditions and paperwork permit, allocated to 2025/26. A SEIS investment follows the same basic timing concept, with its own limit and certificate. Before choosing the earlier year, compare the tax actually due in both years, the annual investment limit and whether another relief already uses the available liability. The claim is not complete merely because the money left the bank account: HMRC says the investor needs the EIS3, SEIS3 or EIS5 certificate before claiming.

The certificate also matters if the investment is made through a fund or if the shares were issued in a different tax year from the tax return being amended. Keep the Unique Investment Reference, issue date, amount claimed and any allocation election with the Self Assessment records. If relief is later withdrawn because the company or investor stops meeting a condition, tell HMRC within the applicable period and recalculate the earlier tax position.

The Risks

The reliefs exist because the risk is real: early-stage companies fail at high rates, EIS and SEIS shares are unlisted and illiquid, valuations are hard to verify, and relief can be withdrawn if the company ceases to qualify. Concentrate only what you can afford to lose, diversify across companies and vintages, and treat the tax relief as compensation for risk rather than the reason to invest. EIS funds spread the risk across a portfolio and handle the compliance, at the cost of fund fees and less control.

Due Diligence Before Claiming

Separate three questions before relying on a projected tax saving: is the company eligible, is the share issue eligible, and is the investor eligible? Ask for the share issue date, the company's compliance timetable, the qualifying trade description, the use of funds and the expected EIS3 or SEIS3 process. Review whether you or an associate is employed by, controls or has already invested in the company. A tax-relief model cannot cure a non-qualifying trade, a prohibited arrangement or a missing certificate.

Keep the investment agreement, subscription evidence, certificate, bank record, company updates and later disposal documents. If the company repays capital, issues further shares, changes its trade or gives value to the investor, ask whether the event affects relief before accepting it. If shares are held jointly, the tax treatment and certificates should be checked for each owner rather than assumed from the payer's bank account. These controls are particularly important for a fund where the manager supplies consolidated information but each investor still makes their own claim.

Frequently Asked Questions

Model your position with the EIS/SEIS Calculator→ and compare alternatives with the ISA Calculator→. Pair this guide with Venture Capital Trusts 2026/27 and Capital Gains Tax 2026/27 for the wider tax-efficient investing picture.

Official sources

• HMRC: Tax relief for investors using venture capital schemes
• HMRC: Use a venture capital scheme to raise money for your company
• HMRC: HS341 Enterprise Investment Scheme Income Tax relief 2026
• HMRC: Capital Gains Tax rates
• GOV.UK: Business Relief for Inheritance Tax