SEIS Advice in Practice: Six Client Conversations

Most SEIS advice is not exotic. The same six client conversations arrive on repeat: the founder who took money before assurance, the investor with no tax bill to relieve, the client who wants last year’s relief, the director who wants relief on his own round, the couple with a capital gain, and the client whose company failed. This piece walks each conversation as it actually happens, with the technical answer and the follow-up question an adviser should ask next.

1. “We already took the money. Now they want SEIS.”

A founder client calls: three angels transferred funds last month, shares have not been issued, and everyone assumed SEIS “would be sorted later”. This one is usually recoverable, because the fatal line is the share issue, not the bank transfer. If shares have not yet been allotted, the company can still apply for advance assurance, hold the money as a subscription pending allotment (documented, ideally regularised under an advanced subscription agreement if the wait will be long), and issue once assurance lands.

The follow-up question: has anything been signed that calls the money a loan? A loan agreement, interest accruing, a repayment right in an email thread, any of these poisons the subscription-in-cash requirement if shares are issued against conversion of the debt. If the money went in as a documented loan, the clean route may be repayment and fresh subscription, which needs care and professional handling. The instrument rules are in the ASA guide.

2. “I love the relief. I have almost no income tax bill.”

An investor client, often recently retired or between exits, wants £100,000 of SEIS for the 50% relief, but their income tax liability this year is £9,000. SEIS income tax relief is a tax reducer: it can take a bill to zero but never below, and the unused balance does not roll forward. Relief this year is capped at £9,000, full stop, unless carry back helps.

The follow-up: what was last year’s liability? The one-year carry back lets them treat subscriptions as made in the prior year, using that year’s bill and that year’s £200,000 limit. And check the other layers still work: CGT disposal relief and loss relief do not depend on a big income tax bill in the subscription year, though loss relief against income needs a liability in the year it is claimed. The mechanics are in how to claim and the carry back guide.

3. “Can I get the relief for last year? I paid a fortune.”

Yes, and this is the most useful lever in the box. Carry back treats SEIS shares as subscribed in the previous tax year, at the client’s choice, up to that year’s unused limit. The claim usually rides the Self Assessment return, or an amendment to it, and the overall deadline runs long: claims can be made up to five years after the 31 January following the tax year the subscription is treated as made in. The certificate is the gate: no SEIS3, no claim, so manage the client’s expectations around current processing times before promising a January repair to last year’s bill.

4. “I’m the director. Surely I can invest in my own company?”

The connection rules, not the paperwork, decide this one. An investor connected with the company gets no SEIS income tax relief, and connection has two limbs: holding over 30% of shares, votes or assets, or being an employee. Directors get a carve-out that employees do not: a director can qualify, provided the 30% line is respected, counting associates (spouse, parents, children, but not siblings). The classic failure is the founder-director who already holds 60% subscribing for more shares and expecting relief; the classic success is the angel who joins the board with 15% and keeps relief as a director. The full rules are in who can claim SEIS.

5. “We sold a rental flat. The gain is painful.”

A couple with a £60,000 residential property gain asks whether SEIS helps. Reinvestment relief exempts half of a chargeable gain matched to SEIS subscriptions in the same tax year (the same shares must also attract income tax relief). Match £60,000 of subscriptions and £30,000 of the gain disappears permanently, saving £7,200 at the 24% residential rate; the remaining half stays taxable. Each spouse has their own limits, so splitting the subscription can work harder.

The follow-up is the suitability conversation, and it is not optional: the tax tail must not wag the investment dog. The clients are contemplating high-risk, illiquid shares in a seed company to save £7,200; the capital at risk is £60,000. That arithmetic belongs in writing. The relief mechanics are in the CGT reliefs guide; the suitability frame is in the portfolio suitability piece.

6. “The company went under. What now?”

First, sympathy; second, arithmetic. The client keeps the 50% income tax relief already claimed (a genuine commercial failure is not a withdrawal event). The loss for loss relief purposes is the net cost: subscription minus relief received. That loss can go against income of the year of loss or the prior year, or against gains. A 45% taxpayer who subscribed £10,000 recovers £5,000 in relief plus up to £2,250 against income: total downside 27.5p per pound. Negligible value claims can crystallise the loss without a liquidation where the shares are effectively worthless. Walk the numbers in the loss relief guide or the calculator.

The pattern in all SEIS advice

All SEIS advice turns on the same three coordinates: timing (which tax year, which clock), capacity (whose limit, whose liability), and status (connected or not, issued or not, qualifying or not). An adviser who fixes those three coordinates before reaching for the legislation answers most SEIS advice questions in one meeting, and knows precisely when to refer to a specialist: novel instruments, group structures, anything where the paper trail and the facts disagree. For that last case, the evidence trail is the checklist to hand the client.

Sources

HMRC, Seed Enterprise Investment Scheme guidance; HMRC Venture Capital Schemes Manual (connection, reinvestment relief, withdrawal); ITA 2007 Part 5A. Figures correct as at 17 July 2026, checked against our rules and limits reference. Education for professionals, not client-specific SEIS advice.