UK: What tax reliefs are available to individuals who invest in UK startups?

The UK’s Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) offer tax relief to individuals to encourage them to invest in unlisted companies.  It is also possible to invest through a Venture Capital Trust (VCT) which then uses the money to invest in a portfolio of qualifying trading companies. Both the investor and the company concerned must satisfy HMRC’s conditions for use of the relevant relief.  Depending on the relief, an investor may be able to claim:

• Income Tax relief against an investment in a qualifying company or Venture Capital Trust;
• Capital Gains Tax relief on gains made on the investment; or
• Capital Gains Tax deferral relief when a previous gain is reinvested.

An investor may invest in different companies through different reliefs, as long as they keep within the limits for each relief in that tax year. To claim full tax relief the investor needs to keep their whole investment in the company for at least three years.  Tax relief will be lost if either the investor or the company fails to continue to meet the conditions for the relief. 

More detail on the available reliefs and conditions are set out in UK government guidance. 

Learn more: UK Founder Series: Get Ready to Raise