Important: Tax relief eligibility depends on your individual circumstances. This article is for educational purposes only and does not constitute tax or financial advice. Consult a qualified tax adviser before making investment decisions based on SEIS/EIS eligibility.
Why UK Investors Have a Structural Advantage
One of the most underappreciated aspects of equity crowdfunding in the UK is the government's Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). These programs provide tax incentives that are so generous they fundamentally change the risk/reward calculation for UK investors.
If you're a UK taxpayer and you're not factoring SEIS/EIS into your equity crowdfunding strategy, you're leaving significant money on the table.
SEIS: For the Earliest-Stage Investments
The Seed Enterprise Investment Scheme is designed for investments in very early-stage companies — typically pre-revenue or early-revenue businesses that are less than three years old.
The key benefits:
- 50% income tax relief on investments up to £200,000 per tax year. If you invest £1,000 in a SEIS-eligible company, you can claim £500 back against your income tax bill.
- Capital Gains Tax exemption on any profits from the sale of SEIS shares, provided you hold them for at least three years.
- Loss relief: If the investment fails, you can offset the net loss (after the 50% relief) against your income tax. This dramatically reduces your downside.
A worked example:
You invest £1,000 in a SEIS-eligible company. You claim 50% income tax relief, so your effective cost is £500. If the company fails completely, you can claim loss relief on the remaining £500, potentially reducing your net loss to around £225 (depending on your tax rate). Your maximum loss on a £1,000 SEIS investment is approximately £225.
EIS: For Slightly Later-Stage Investments
The Enterprise Investment Scheme covers a broader range of companies than SEIS — typically Seed to Series A stage businesses that have been trading for less than seven years.
The key benefits:
- 30% income tax relief on investments up to £1 million per tax year (£2 million for knowledge-intensive companies).
- Capital Gains Tax exemption on profits from EIS shares held for at least three years.
- Loss relief similar to SEIS, reducing the effective downside.
- Capital Gains Tax deferral: You can defer CGT from other investments by reinvesting the gain into EIS-eligible companies.
How to Find SEIS/EIS Eligible Deals on Crowdcube
Crowdcube is the primary UK platform for SEIS/EIS eligible deals. Most UK-based companies raising on Crowdcube will indicate their SEIS or EIS eligibility on their campaign page.
Important caveats:
- SEIS/EIS eligibility is confirmed by HMRC after the investment, not before. A company can indicate it intends to apply for SEIS/EIS advance assurance, but the actual relief is only confirmed later.
- The company must maintain its qualifying status for the relief to apply. If the company is acquired or changes its business significantly, the relief may be at risk.
- You must be a UK taxpayer with sufficient tax liability to claim the relief.
The SBC Approach to SEIS/EIS
My strategy for UK investments is straightforward: I prioritise SEIS-eligible deals on Crowdcube, because the 50% income tax relief fundamentally changes the economics. A £500 investment in a SEIS-eligible company has an effective cost of £250 after relief. That's a very different risk profile from a standard investment.
For EIS deals, the 30% relief is still meaningful, but I apply the same rigorous due diligence process I use for all investments. Tax relief is not a substitute for investment quality — it's a bonus on top of a deal that already makes sense on its own merits.
Sources: Crowdcube SEIS/EIS guides (crowdcube.com). HMRC guidance on SEIS/EIS. All tax figures are illustrative and based on current UK tax rates.
