How to Claim EIS/SEIS Tax Relief — The 3 Step Guide

Photo by Kelly Sikkema on Unsplash

Given the huge current volatility in the crypto market and traditional stocks, I have recently diversified my investment portfolio by investing in early-stage startups via a crowdfunding platform.

SEIS/EIS tax relief is an absolute godsend for both investors and entrepreneurs. The relief massively reduces the risk for investors by lowering the capital at risk.

Essentially it is a scheme that makes investing in early-stage startups extremely attractive from a risk and tax standpoint.

The problem is, how on earth do you get a hold of this relief?

As someone new to SEIS/EIS tax relief, I had no clue about how to practically access it.

I searched everywhere — the government website, HMRC, private companies online, and video tutorials, but all of them left me feeling more perplexed.

Nevertheless, after many hours of research, I finally figured it out and after a few months following the paperwork submission, I got an immediate rebate with a cheque in the mail!

As a micro-investor and a startup owner myself, I don’t want this scheme to be exclusive to the super-rich — it is probably confusing on purpose.

So here are the steps I used to make it as easy as possible for you to benefit from this tax relief.

Note: I am not a financial advisor. None of the advice in this blog is financial advice. Seek independent financial advice from someone who is qualified if confused.

Step 1: Check the form

Once you invest, the startup should provide you with a SEIS3 or EIS3 form.

If you used Seedrs like me, these documents will be under ‘Tax documents’ under your portfolio.

In my experience, it may take a few months from when you invest to when they provide this form to you, so if you haven’t received it yet, wait patiently or lightly nudge the startup to hear an update.

The first page will be filled out by the startup. Just pay attention to the share quantity, the amount subscribed and the unique investment number to check if it is all correct.

Page 1 example. Credit: Islamicfinanceguru

Step 2: Fill in the form

Once checked, move to page 3.

This is where you need to fill out the information. It should look like this:

Page 3 example. Credit: Islamicfinanceguru

This may look confusing, however, you can ignore the last third section as that is for alternative relief. Just focus on the first 2 sections.

And here is how it should look:

Page 3 example filled out. Credit: Islamicfinanceguru

For the ‘Unique investment reference number’, just copy the number on page 1.

For the two options of: ‘I wish relief to be allowed in my PAYE coding’ and ‘I am claiming relief for the year for which I have already sent in a tax return’, it depends on your situation and how you are claiming.

Here is an annotated PDF of the form for ease.

Step 3: Post & wait

This is the step I was really confused with as I could not find any information about how I submit these forms and I couldn’t find any advice online either unless I paid them to do it for me!

I have had it confirmed by HMRC that once you print out the form, post it to:

PAYE and Self Assessment
HM Revenue and Customs

HMRC themselves make this very unclear, but this is the confirmed correct address.

Once you have sent the form, now you have to wait. It took a few months before I got a cheque in the mail, so be prepared to be very patient.

Keep all the forms and correspondence mentioned in this email as HMRC may ask you to produce them later.

Final thoughts

SEIS and EIS are fantastic tax incentives for people to invest in young businesses.

As a startup founder and someone who enjoys investing a little in startups, this is an amazing scheme for both sides.

However, not only do most people not know about it but if they do, there is a dearth of practical information on how you can actually make use of it!