SEIS Loss Relief: How It Works and How to Claim
How SEIS loss relief is calculated, when a negligible-value claim may help, claim deadlines and worked examples after income tax relief.
Written by Steve Livingston LLB FCA, IP Tax Solutions. Technical content reviewed 21 September 2026.
SEIS loss relief may reduce the cost of an investment that fails, but it is not an automatic refund. First establish an allowable loss and check the separate share-loss conditions. The loss calculation must deduct SEIS income tax relief that remains attributable to the shares.
If the loss qualifies for relief against income, the tax saving depends on the income against which it is used. An investor with no usable income tax liability cannot assume a 40% or 45% saving. This guide explains the calculation and the evidence needed before making a claim.
How is a SEIS investment loss calculated?
For a straightforward subscription and disposal, start with the subscription cost, deduct disposal proceeds and then deduct the SEIS income tax relief retained. Acquisition/disposal costs, part disposals and mixed holdings can require further calculations. The adjustment for SEIS relief is explained in HMRC VCM40100 and TCGA 1992 s.150E.
For example, you subscribe £20,000, receive and retain £10,000 of SEIS income tax relief and later make a qualifying disposal for nil. Ignoring costs, the allowable loss is £10,000. You cannot claim loss relief on the original £20,000 as though the initial relief had never been given.
Worked examples: how much could an investor recover?
Assume the £20,000 investment above fails completely; the £10,000 initial relief is retained; the entire £10,000 loss qualifies for deduction against income; and sufficient income is available at the illustrated rate. Ignore other reliefs, allowances, costs and reinvestment relief.
| Income tax rate applying to the loss | Initial SEIS relief | Further saving on £10,000 loss | Net cost of failed investment |
|---|---|---|---|
| 20% | £10,000 | £2,000 | £8,000 |
| 40% | £10,000 | £4,000 | £6,000 |
| 45% | £10,000 | £4,500 | £5,500 |
The 45% example represents a 72.5% combined tax saving on the original investment, not a guaranteed recovery or a limit on commercial risk. Rates and the effect of the deduction depend on the investor's income and circumstances; Scottish income tax can differ. Where a deduction crosses tax bands, one headline rate will not describe the whole saving.
Does every failed SEIS investment qualify for income loss relief?
No. The income claim is governed by ITA 2007 Part 4 Chapter 6. It requires an allowable loss on qualifying shares and an eligible disposal. For SEIS shares, check the subscribed-for shares and qualifying-trading-company requirements rather than assuming the EIS-attribution shortcut in s.131 applies.
An eligible disposal can include an arm's-length sale, a distribution on dissolution or winding up, extinction of the asset or a valid negligible-value deemed disposal. An informal write-down in your own records does not itself establish the claim. The subscription history and company conditions still matter.
The general cap on certain income tax reliefs has an exception for qualifying share-loss relief where SEIS relief is attributable. Where SEIS relief is unavailable or has been withdrawn, do not assume the same exception applies. Review the independent share-loss conditions and the applicable cap. See ITA 2007 s.24A.
Can I claim before the company is dissolved?
Potentially. If you still own shares that have become of negligible value, a claim under TCGA 1992 s.24(2) can treat them as disposed of and reacquired at their negligible value. This can establish a loss without waiting for formal dissolution.
Negligible value is not the same as a disappointing valuation or an investment that is merely difficult to sell. Evidence may include accounts, insolvency reports, the ranking of creditors, assets and prospects of recovery. Nil is not automatically the correct deemed value.
A claim can sometimes specify an earlier date within the permitted two-year look-back, but the ownership and negligible-value conditions must have been met at that date. That timing rule is separate from choosing the income tax year for share loss relief. Obtain advice before combining the two.
Which tax year can I use the loss against?
Under s.132, an eligible loss may be deducted in calculating net income for the year of the loss, the immediately preceding tax year or both. If both are claimed, specify which year is used first. The claim rules govern the amount used; this is not an unrestricted choice to preserve allowances by claiming any convenient fraction.
A loss arising in 2026/27 can therefore potentially be used against 2026/27 income or 2025/26 income. Work out the effect in both years, including allowances and other reliefs, before choosing.
What is the deadline?
The income share-loss claim must be made by the first anniversary of the normal Self Assessment filing date for the year of the loss. For a loss in 2026/27, the ordinary deadline is 31 January 2029. This follows s.132(4) and HMRC VCM74020.
Do not confuse this with the longer deadline for claiming initial SEIS income tax relief, or with the separate requirements for notifying a capital loss. A late discovery that the company has failed is a reason to check dates promptly.
How do I prepare a claim?
- Gather the subscription documents, share register evidence and SEIS3 certificate.
- Confirm the SEIS income tax relief actually given and still retained.
- Establish the disposal or deemed-disposal date and proceeds/value, with supporting evidence.
- Check the qualifying-share and company conditions under the share-loss rules.
- Calculate the allowable loss and compare the relevant income tax years.
- Make the claim through the appropriate Self Assessment or standalone claim route, specifying the amount, relevant years and any negligible-value claim.
HMRC's share-loss manual identifies the main checks. Keep the calculation with the claim rather than relying only on a platform's estimate.
What if I use the loss against capital gains instead?
An allowable loss may be available against chargeable gains under the capital-loss rules. You cannot use the same loss twice. Any amount relieved against income must be removed from the capital-loss calculation; the remaining treatment needs a separate computation. See s.133.
Does company failure withdraw the original SEIS relief?
Commercial failure alone is not a complete withdrawal analysis. Check the reason for failure, statutory protections, original eligibility and any separate breach. If income tax relief is withdrawn or reduced, recalculate the loss using the relief that actually remains. Never add loss relief to an initial tax saving that has been repaid.
For the original claim, see claiming SEIS income tax relief. For gains on successful investments and reinvestment relief, see our SEIS capital gains guide.
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.
