How to Claim SEIS Income Tax Relief on Self Assessment and Save on Your Tax Bill
Investing in startups through SEIS can slash your tax bill, but only if you claim the relief correctly. HMRC’s process requires specific documentation and careful completion of your self assessment.
SEIS offers generous tax reliefs and tax advantages, making it one of the most attractive tax incentives for investors in very early stage companies.
Many investors miss out on thousands of pounds due to simple filing errors. SEIS is specifically designed to support early stage companies, encouraging investment in startups at their most formative stage. Getting this right could save you significant money on your tax bill.
Need help claiming your SEIS tax relief? Pie.tax, the UK’s first personal tax app, can identify all eligible reliefs automatically. Or if you’re just here to get to grips with it all, let’s break it down!
What is SEIS Income Tax Relief?
SEIS (Seed Enterprise Investment Scheme) offers a generous 50% income tax relief on investments up to £100,000 per tax year. This means if you invest £20,000 in a qualifying startup, you could reduce your income tax bill by £10,000. SEIS tax benefits include not only income tax relief but also capital gains tax exemption, loss relief, and inheritance tax relief, making it one of the most comprehensive venture capital schemes for UK taxpayers.
The scheme encourages investment in early-stage companies. To qualify, the company must be a SEIS eligible company (or SEIS qualifying company), be UK-based, have fewer than 25 employees, and have gross assets not exceeding £350,000. Companies often seek advance assurance from HMRC to confirm their eligibility before issuing SEIS shares.
SEIS shares must be ordinary shares with no special rights to the company's assets, and holding these shares for at least three years is required to qualify for disposal relief and capital gains tax exemption. Knowledge intensive companies may qualify for enhanced reliefs under other venture capital schemes.
The maximum SEIS investment limit is £100,000 per tax year. The money invested can be spread across multiple SEIS eligible companies or SEIS funds, and SEIS funds offer diversification and professional management. SEIS investments can be made alongside other venture capital schemes, such as EIS or venture capital trusts, within the same tax year, and investors can claim relief from multiple venture capital schemes.
You must hold the shares for at least three years to keep the relief. If you sell earlier, HMRC will claw back the tax relief you claimed. If the shares are sold at a loss, investors can claim loss relief (including SEIS loss relief) to offset their tax liability, and claim loss relief or claim SEIS loss relief can be made through the self assessment process.
SEIS reinvestment relief and capital gains reinvestment relief allow investors to reduce their capital gains tax liability by reinvesting gains into SEIS shares, and claiming SEIS reinvestment relief requires completing the appropriate claim form.
One of the best features is that you can carry back relief to the previous tax year. This gives you flexibility in managing your tax position. Unused income tax relief cannot be carried forward to future tax years, so it is important to claim relief in the relevant tax year or the same tax year as the investment. SEIS tax reliefs can be claimed through an online or paper tax return, and a claim form (such as the SEIS3 certificate) is required. Seeking advice from a qualified tax professional can help ensure all available SEIS tax benefits are claimed correctly.
How to Claim SEIS Relief on Your Self Assessment
Before starting your tax return, make sure you have your SEIS3 certificate from the company you invested in. This is crucial – you cannot claim without it. You must also ensure the company has received advance assurance from HMRC to confirm your SEIS investment qualifies before you claim SEIS tax relief.
Log into your HMRC online account and go to the Additional Information pages (SA101) of your Self Assessment tax return. This is where SEIS claims are processed. You can claim SEIS tax relief through either an online or paper tax return, and the claim form (SEIS3) must be attached or referenced as part of your submission.
Find the “Other tax reliefs” section and locate boxes 11-13, which are specifically for SEIS investments. These boxes must be completed accurately. The SEIS section of the tax return is part of the broader venture capital scheme reporting, and claiming SEIS tax reliefs and other SEIS tax benefits can significantly reduce your overall tax liability.
In box 11, enter the amount you’re claiming relief on (up to £100,000). This figure should match what’s shown on your SEIS3 certificate. Here, you are claiming relief for the money invested in SEIS shares, which can include investments made through SEIS funds or multiple venture capital schemes. If you are claiming SEIS reinvestment relief, complete the relevant section of the tax return and provide details of the reinvested capital gains.
Add the SEIS3 reference number in box 12. This unique identifier helps HMRC verify your claim against their records.
Finally, type the name of the company you invested in at box 13. If you’ve invested in multiple SEIS-qualifying companies, repeat this process for each one. If you have unused income tax relief, it cannot be carried forward to future tax years, so ensure you claim in the relevant tax year or the same tax year as the investment.
If your SEIS investment results in a loss, you may be able to claim loss relief (including SEIS loss relief) to offset your income tax liability or capital gains tax liability, and you can request an adjustment to your PAYE tax code or Self Assessment tax code to reflect the relief.
I once forgot to include an SEIS3 reference number and had my claim rejected. It took three weeks to resolve, delaying my tax refund significantly.
Claiming Carry Back Relief
One brilliant feature of SEIS is the ability to carry back your investment to the previous tax year. This means you can claim relief for the relevant tax year or the same tax year as the investment, depending on your tax position, and reduce your tax bill for a year that’s already ended.
To do this, complete the same boxes as normal but tick the ‘carry back’ option if available in your tax software. This signals to HMRC that you want the relief applied to the previous year.
If there’s no specific option, add a note in the “Any other information” box. State clearly that you’re claiming carry back relief for this investment.
Remember, you must make this election within four years of the end of the tax year you’re carrying back to. Missing this deadline means losing the opportunity. Unused income tax relief cannot be carried forward beyond the relevant tax year, so it is important to claim relief promptly.
Common SEIS Claim Mistakes to Avoid
The most frequent error is trying to claim without having received your SEIS3 certificate. Wait until you have this document before filing your claim.
Double-check all the details on your SEIS3 match what you're entering on your tax return. Small errors can lead to rejected claims and unnecessary delays.
Watch out for timing issues with certificates. Companies must have been trading for at least four months or spent 70% of the raised money before issuing them.
Don't forget the £100,000 annual investment limit. Exceeding this will result in some of your relief being denied by HMRC.
Keep all your paperwork for at least six years after filing. HMRC may ask to see evidence of your investment during this period.
Final Thoughts
SEIS tax relief is one of the most generous tax breaks available to UK investors. Claiming it correctly is essential to benefit fully from this valuable incentive.
Always wait for your SEIS3 certificate before claiming and double-check all details carefully. The relief can significantly reduce your tax bill, making the paperwork worthwhile.
If you're unsure about any aspect of claiming SEIS relief, seek professional advice. It's better to get help than risk errors that could cost you money.
Pie tax: Simplifying how to claim SEIS income tax relief on self assessment Tax
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