What happens if HMRC rejects advance assurance?

HMRC refusal can delay the investment raise and weaken investor confidence. The share structure and qualifying status may need to be corrected before the capital raise proceeds.

How do I claim EIS income tax relief on my Self Assessment?

Enter the details from your EIS3 certificate in the Reliefs section of your Self Assessment tax return. The certificate and relief calculation should be reviewed before filing.

What happens to my EIS relief if the company fails?

You may be able to claim loss relief against income or capital gains. The available relief depends on when the shares were acquired, the original relief received and your marginal tax rate.

Can I carry back SEIS relief to the previous tax year?

Yes. SEIS relief can be carried back to the preceding tax year, potentially offsetting income tax from that year. The claim must be made within the applicable filing deadlines.

What triggers loss of EIS or SEIS relief?

Relief may be lost if the qualifying trade conditions fail, the risk-to-capital requirement is breached, connected-party status arises or the qualifying shares are disposed of too early.

Can SEIS and EIS be used together?

Yes. SEIS is typically used first, followed by EIS, subject to the applicable investment limits, timing requirements and qualifying conditions.

What happens after the compliance statement is submitted?

HMRC reviews the compliance statement and supporting evidence. Where accepted, the company can issue the relevant compliance certificates to eligible investors. Relief remains subject to continuing compliance during the qualifying holding period.

EIS and SEIS Tax Relief UK

Understanding EIS and SEIS Tax

EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) are UK government-backed investment schemes designed to encourage investment in qualifying early-stage businesses. They offer eligible investors valuable tax reliefs while helping startups and growing companies raise essential funding.

SEIS is generally aimed at smaller, early-stage companies, while EIS can support businesses that have progressed further in their development. The available reliefs can make investing in qualifying companies more attractive while providing businesses with access to investment capital.

Our EIS and SEIS tax advice helps investors and companies understand eligibility requirements, assess potential tax benefits, and navigate the compliance and documentation requirements associated with these schemes.

What Is EIS and SEIS Tax Relief?

EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) are UK government investment schemes that offer generous tax incentives for eligible investors in young UK trading companies, including income tax relief, Capital Gains Tax exemption and loss relief.

It Includes:

Why SEIS and EIS Relief Fails

An EIS or SEIS investment is meant to reward risk. You put capital into an early-stage company. In return, HMRC offers income tax relief, CGT exemptions, and loss protection. But relief is only secure if the structure holds. We review positions where it did not.

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Common SEIS & EIS Risk Situations We Handle

Advance Assurance Risk

Founder Raise Exposure

Investor Relief Risk

Post-Issue HMRC Challenge

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Frequently
Asked Questions

Here’s the Answer to Some Frequently
Asked Questions.

01.What happens in case HMRC denies your application for advance assurance?

In case the application gets turned down, it will be delayed, which will affect the investor’s confidence negatively, and advance assurance applications usually need the company’s business plan and financial forecasts. It is most likely that the capital proceeds will require changes to share structure and tax qualifying status.

02.How do I get income tax relief through EIS and fill in my Self Assessment?

You should use the EIS3 certificate details in the section “Reliefs” in your Self Assessment application to claim tax relief. Before submission, we will check the certificate and the calculations for EIS income tax relief, as an EIS investment can reduce the investor’s income tax liability if the conditions are met, subject to the annual limit for the relevant tax year.

03.What is my EIS tax relief going to be in case the company is unsuccessful?

Depending on the time of share acquisition and the level of taxation, it may be possible to receive tax loss relief. EIS provides significant tax reliefs and tax advantages, but there remains significant risk because these schemes are intended to encourage investment into early-stage companies.

04.Can SEIS relief be carried backward tax-wise?

Yes, SEIS relief can be carried back to the previous tax year, and SEIS investors can claim up to £50,000 of income tax relief a year because SEIS income tax relief is 50% on investments up to £100,000; this may also affect reinvestment relief or a capital gains tax exemption depending on the claim.

05.What can cause cessation of relief connected with EIS or SEIS?

In case of breach of conditions concerning qualifying trade, breach of risk-to-capital condition, presence of connection, or sale of shares before the 3-year holding period, relief is lost. For EIS companies, the relevant tests generally require gross assets of no more than £15 million and fewer than 250 employees, or up to 500 for knowledge-intensive companies.

Review the Position Before Exposure Arises

Relief withdrawal follows structuring error, not intention.

EIS and SEIS

Understanding EIS and SEIS Tax