SEIS Capital Gains Tax Relief: Reinvestment and Disposal
Understand SEIS reinvestment relief, the disposal exemption, carry-back timing and how these differ from EIS capital gains deferral.
Written by Steve Livingston LLB FCA, IP Tax Solutions. Technical content reviewed 21 September 2026.
SEIS offers two distinct capital gains tax reliefs. Disposal relief can exempt a gain when you sell qualifying SEIS shares after the required holding period. Reinvestment relief can exempt part of a gain on another asset when matched with a qualifying SEIS subscription.
Neither follows simply from a company holding advance assurance. Income tax relief, investment timing and continuing conditions matter. Start with SEIS Explained if you need the company and investor overview.
The two SEIS capital gains reliefs compared
| Relief | Which gain? | Core distinction |
|---|---|---|
| Disposal exemption | The gain on selling the SEIS shares themselves. | Requires the qualifying holding period and attributable income tax relief; restrictions can apply where relief is partial or reduced. |
| Reinvestment relief | A chargeable gain on another asset. | Exempts 50% of the qualifying gain matched with the qualifying subscription, subject to the applicable limit and tax-year rules. |
The statutory provisions are TCGA 1992 s.150E for disposal relief and Schedule 5BB for reinvestment relief.
How does the disposal exemption work?
A qualifying gain on SEIS shares may be exempt when disposal takes place on or after the third anniversary of their actual issue date. Income tax relief must be attributable to the shares. If relief is obtained in full and retained, the full qualifying gain can be exempt.
For example, assume you subscribe £20,000, obtain and retain the full £10,000 income tax relief and sell the shares four years after issue for £70,000. Ignoring costs, the £50,000 gain can be exempt if the relevant conditions remain satisfied. The three-year period is not measured from the date of an advance-assurance letter or a carry-back tax year.
HMRC VCM40020 explains the basic exemption. Selling early can withdraw income tax relief and prevent disposal exemption.
What if I received only part of the income tax relief?
Partial income tax relief can restrict the exempt portion of a gain. However, there is an important exception where some relief is given and the sole reason full relief cannot be given is that the claim reduces the investor's income tax liability to nil. That exception can preserve full disposal exemption.
This is different from having no income tax liability and receiving no income tax relief at all. In that case the shares do not qualify for the SEIS disposal exemption merely because the company was eligible. See VCM40030 and VCM40060. A reduction or withdrawal after the initial claim requires a fresh calculation.
How does SEIS reinvestment relief work?
Reinvestment relief applies to a qualifying chargeable gain matched with an eligible SEIS subscription. For the current regime, 50% of the matched gain can be exempt. With a £200,000 qualifying annual subscription limit, the maximum gain exempted is £100,000. That is an amount of gain relieved, not a £100,000 tax repayment.
You must claim and obtain SEIS income tax relief on the relevant shares. The amount of the subscription, eligible gain, allocation and income tax treatment all need to support the reinvestment claim. You do not obtain full relief on a larger gain merely by making a smaller investment.
Reinvestment relief is an exemption subject to its conditions. It differs from EIS deferral, under which an original gain is postponed and may return to charge on a later event. See HMRC VCM45020.
A reinvestment relief example
Assume an investor realises a qualifying gain of £40,000 on 15 September 2026 and subscribes £40,000 for SEIS shares issued on 1 December 2026. The investment and gain are in 2026/27. The investor claims and obtains the full £20,000 SEIS income tax relief, has available annual capacity and meets all other conditions.
The matched gain is £40,000 and the reinvestment exemption is £20,000. If that £20,000 would otherwise all be taxed at 24%, the CGT saving is £4,800. This rate assumption excludes interactions with losses, the annual exempt amount and other reliefs. The income tax saving is separate. Current main CGT rates are set out in HMRC's rates guidance.
Can SEIS reinvestment relief be carried back?
The income tax allocation controls the relevant tax year. A valid election treating shares as issued in the preceding tax year for SEIS income tax purposes can also allow the subscription to be matched with a gain in that preceding year. It does not change when the shares were actually issued for the holding period.
For example, a gain arises on 10 March 2026, in 2025/26. SEIS shares are issued on 1 October 2026, in 2026/27. If the investor validly carries the relevant subscription back to 2025/26 and obtains income tax relief for that year, reinvestment relief may be available against the 2025/26 gain. Check that year's capacity, the gain and all the other conditions. Without the appropriate allocation, simply investing within a few months does not establish the match.
The investment does not have to follow the disposal within the relevant tax year. If the SEIS shares were issued before the gain accrued, you must still hold them when that gain accrues. Do not import the EIS one-year-before/three-years-after investment window into SEIS. See HMRC's reinvestment timing guidance and our income tax carry-back guide.
How does this compare with EIS deferral relief?
EIS deferral can postpone a qualifying gain where the subscription falls within its separate investment window. It is not the same as permanently exempting 50% of a matched gain under SEIS. EIS deferral can also be available in circumstances where EIS income tax relief is not, so the investor tests must be considered separately. See TCGA 1992 Schedule 5B.
Choose the structure based on the company's eligibility and the investor's actual tax position, investment risk and liquidity. Tax relief does not make the underlying investment suitable or guarantee a return.
How do I make the claim?
Obtain the SEIS3 certificate, check the income tax claim and identify the gain and tax year being matched. Retain a computation showing the subscription, relief, gain, allocation and any restrictions. Follow the relevant Self Assessment capital-gains instructions and certificate claim procedure, particularly where carry-back is involved.
The reinvestment claim deadline is five years after 31 January following the tax year in which the shares were issued or treated as issued on carry-back. In the example above, a 2025/26 deemed issue gives a 31 January 2032 deadline. The carried-back income tax claim also follows that earlier deemed-issue year under s.257EA(2). See HMRC VCM45030 and s.257EA. HMRC's HS393 helpsheet is a useful procedural starting point. For company certificates, see our SEIS1/SEIS3 guide.
Can reinvestment relief be withdrawn?
Yes. Withdrawal or reduction of the associated income tax relief can produce a corresponding withdrawal or reduction of reinvestment relief. Do not assume this is taxed in the year HMRC processes the withdrawal: the legislation contains its own deemed-gain timing. See VCM45090.
If the SEIS shares instead make an allowable loss, the calculation must take account of income tax relief retained. Read our separate SEIS loss relief guide rather than treating disposal exemption as a bar to every loss claim.
Need help with SEIS?
IP Tax Solutions advises founders, investors and their professional advisers on SEIS eligibility, investment terms, compliance and claims. See our SEIS and EIS advisory service or contact Steve with the facts and relevant dates.
