SEIS vs EIS vs VCT Explained: Tax Reliefs, Limits and Rules

The Seed Enterprise Investment Scheme (SEIS), the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) all give tax relief for putting money into small, unlisted, higher-risk companies. SEIS is for the very youngest companies and EIS for young companies that are growing. A VCT is a listed fund that invests in companies like these, so you hold a spread of them rather than shares in one. The reliefs are generous because the risk of losing money is real.

How much income tax relief do SEIS, EIS and VCTs give?

• SEIS: 50% of the amount you invest, on up to £200,000 a tax year.
• EIS: 30%, on up to £1 million a tax year, or £2 million if everything above £1 million goes into knowledge-intensive companies.
• VCTs: 20%, on up to £200,000 a tax year, for shares issued on or after 6 April 2026. Before that date it was 30%.

The relief comes off your income tax bill, so £10,000 invested is worth £5,000 through SEIS, £3,000 through EIS and £2,000 through a VCT. It can reduce your bill to nil but not below, so it is limited by the tax you actually owe. SEIS and EIS relief can be carried back to the previous tax year; VCT relief cannot. To claim SEIS or EIS relief you need the certificate the company gives you, form SEIS3 or EIS3, and you cannot claim before you have it.

How long do you have to keep the shares?

SEIS and EIS shares have to be held for at least three years, and VCT shares for at least five. Sell sooner, or break certain other conditions, and HMRC withdraws the income tax relief in whole or in part.

How are gains and losses taxed?

• Gains: SEIS and EIS shares sold after three years are free of capital gains tax, provided income tax relief was claimed and not withdrawn. VCT shares bought within the £200,000 annual limit are free of capital gains tax whenever they are sold, and their dividends are free of income tax.
• Losses: if SEIS or EIS shares are sold at a loss, the loss less the income tax relief already given can be set against income of that year or the year before, or against capital gains. The usual cap on income tax reliefs, the greater of £50,000 or 25% of income, does not apply to these losses. A loss on VCT shares cannot be used at all.
• EIS deferral relief: a gain on any asset can be deferred by investing the amount of the gain in EIS shares issued between one year before and three years after the disposal. There is no upper limit and no need to claim income tax relief. The gain is postponed rather than cancelled, and usually comes back into charge when the EIS shares are sold.
• SEIS reinvestment relief: half of a gain reinvested in SEIS shares is exempt outright, where the gain arises in the tax year the SEIS relief is given for. It needs SEIS income tax relief as well, so the most it can exempt is £100,000 of gains a year.

In round numbers, a higher-rate taxpayer who puts £10,000 into SEIS shares gets £5,000 of income tax relief. If the company fails, the remaining £5,000 loss can be set against income taxed at 40%, which is worth £2,000, so the most that can be lost is £3,000. Under EIS the same £10,000 earns £3,000 of relief and leaves a £7,000 loss worth £2,800, so the most that can be lost is £4,200.

Which companies qualify?

For SEIS, a company must have raised no more than £250,000 under SEIS in total, have gross assets of no more than £350,000 before the shares are issued, have fewer than 25 full-time equivalent employees, and carry on a trade that is no more than three years old. It cannot use SEIS once it has taken EIS or VCT money.

For EIS and VCT money, a company usually has to raise its first such investment within seven years of its first commercial sale, or ten for a knowledge-intensive company, and have fewer than 250 full-time equivalent employees, or 500 if knowledge-intensive. From 6 April 2026 the limits on the company side at least doubled:

• Gross assets of up to £30 million before the share issue and £35 million after, up from £15 million and £16 million.
• Up to £10 million a year of investment under the venture capital schemes, or £20 million for a knowledge-intensive company, up from £5 million and £10 million.
• A lifetime total of £24 million, or £40 million if knowledge-intensive, up from £12 million and £20 million.

The limits for investors did not change, and SEIS has stood as it is since its limits were last raised in April 2023. SEIS and EIS investors must not hold more than 30% of the company, and an SEIS investor cannot be an employee unless they are also a director.

What is advance assurance?

Before issuing shares, a company can ask HMRC whether the investment is likely to qualify. This advance assurance is optional and lets the company show investors that the investment may qualify, but it is not a guarantee: the conditions still have to be met when the shares are issued and afterwards. After the issue the company sends HMRC a compliance statement, and only then can it give investors the SEIS3 or EIS3 certificate they need to claim.

These are high-risk investments whose value can fall to nothing, and the income tax reliefs only help if you have enough tax to set them against. Whether any of them suits you depends on your circumstances, and a qualified adviser can advise.