Take advantage of SEIS as a founder in your own company, and avoid paying the UK government's CGT increase to 24%.
Lots of people think that SEIS isn't available to founders at all, but this is explicitly allowed in the SEIS leglisation (ITA07/S257BA).
This isn't trivial to achieve, and is usually only possible if you have 3 or more co-founders. It's easier to set this up if you are pre-incorporation, but there are ways of achieving this for existing businesses too.
This relies upon the directors being able to benefit from SEIS - if your existing company has been trading for 3 years or more then Founder SEIS will not be possible and the same arrangement can't be made under the EIS scheme.
Benefiting from SEIS tax relief does does cost a little more to achieve, but if you think your startup is going to achieve great things, you can save millions. If you don't think your startup is going to achieve great things... may be worth rethinking your plans!
Before co-founding FounderCatalyst, Sam was a founder of Roc Technologies Ltd. He used SEIS with his fellow investors to invest in his own company as a director.
Roc Technologies grew from £0 to £30m revenue in 4 years and Sam exited to private equity. The use of SEIS saved millions in CGT for each founder and sparked Sam's passion for the schemes.
Connect with Sam on LinkedInCurrently £1,000,000 of your proceeds will be subject to 10% Capital Gains Tax thanks to Business Asset Disposal Relief or BADR. Though the current tax rate increases to 14% on 6 April 2025 and 18% from 6 April 2026-27
The rest of your proceeds will be taxed at the prevailing Capital Gains Tax rate - which moved from 20% to 24% in the budget 30 October 24.
Your shares will be subject to Inheritance Tax rules, meaning that they could be taxed at 40% when passed to your estate.
Founder A (SEIS) | Founder B (no SEIS) |
---|---|
Income tax relief £50,000 (50%) of the investment is claimed as income tax relief. | No income tax relief None. |
Exits for £20M No Capital Gains Tax payable after three years. | Exits for £20M Up to £1m gains taxed at 10% Capital Gains Tax under BADR *. Over £1m gains charged with 24% Capital Gains Tax. |
Founder dies Shares held for over two years qualify for 100% IHT relief under BPR. From April 2026: 100% relief on the first £1m and 50% on the excess, creating a 20% IHT rate above £1m. | Founder dies Shares held for over two years qualify for 100% IHT relief under BPR. From April 2026: 100% relief on the first £1m and 50% on the excess, creating a 20% IHT rate above £1m. |
Startup fails Founder A can claim 22% loss relief (depending on the founder's tax position). | Startup fails None. |
* The rate will rise to 14% for disposals made on or after 6 April 2025, and further increase to 18% from 6 April 2026. |
Multiple founders: Four co-founders, each owning 25%, can qualify for SEIS during incorporation, potentially, by carefully investing in 'subscriber shares'.
Asymmetric shares: A sole founder can initially hold 100% of the shares. Further co-founders joining through SEIS investments can hold up to 30% each, though the original founder will forgo SEIS benefits.
Early investor: For example, if three founders hold 30% each and an investor takes a 10% stake during incorporation.
Foreign ownership: A foreign founder owning 50% does not affect SEIS eligibility for UK-based founders, provided that remaining UK co-founders hold 30% or less each.
For some frequently asked questions (FAQ) read our full blog post on SEIS for founders.
This isn't a service you can just use via our website, but if you want to get in touch we're happy to talk to you about the process, maybe saving you millions of pounds in the future.
Ask away...