How to claim EIS loss relief when a startup fails

Tero team

The team behind Tero

2 min read

Updated 27 August 2026

SEIS & EISLoss relief

Key takeaways

Failure is partly insured. On a failed £10,000 EIS investment, a 45% taxpayer who claimed income-tax relief can recover a further £3,150 through loss relief - the true loss is £3,850.
Two triggers: disposal or negligible value. A dissolution or sale at a loss is a disposal; a company that is still alive but worthless supports a negligible value claim. Both need you to notice.
Noticing is the hard part. Companies are struck off quietly. Nobody writes to shareholders. The claim has a deadline, and most missed loss relief is missed because the failure itself went unseen.

EIS's least appreciated feature is what happens when things go wrong. The income-tax relief you claimed on the way in is yours to keep if the company genuinely fails - and the remaining, at-risk part of your investment generates a second relief on the way out. But none of it is automatic, and the practical failure mode is brutally simple: angels do not find out their companies have died.

The arithmetic

Take £10,000 into EIS, income-tax relief claimed, additional-rate (45%) taxpayer:

Income-tax relief already received: £3,000. Kept, provided the failure is a genuine commercial failure (not a sale within three years).

At-risk amount: £7,000.

Share loss relief: you can set that £7,000 against income at your marginal rate. At 45%, that is £3,150 back.

True loss: £3,850 - 38.5p per pound invested. The same shape applies to SEIS at 27.5p; the calculator shows both side by side.

Loss relief can be set against income of the year of the loss or the previous year (usually the better answer for higher earners), or against capital gains if that suits your position better.

The two triggers

Disposal at a loss. Selling the shares for less than you paid - including the disposal that happens when a company is dissolved and the shares are cancelled.

Negligible value claim. The company still legally exists, but the shares have become effectively worthless. You can claim the asset has become of negligible value, which crystallises the loss without a sale. In insolvency limbo - administration, a long wind-down - this is often the practical route.

Which trigger applies, and in which tax year the loss lands, affects the arithmetic; this is a place where a conversation with your accountant earns its fee.

The deadline

Claims are made through self-assessment and have time limits - broadly, a share-loss-relief claim against income must be made by the first anniversary of the 31 January filing deadline for the tax year in which the loss arose. Miss it and the relief is gone, which matters because of the next section.

Why most loss relief is never claimed

A dissolved startup does not write to its shareholders. The strike-off notice appears in the official record at Companies House and nowhere else. Angels typically discover failures years later, at a portfolio spring-clean - sometimes inside the claim window, often not.

This is a monitoring problem, not a tax problem. Tero watches the register for exactly these events: a strike-off notice or dissolution against one of your holdings raises a flag with the loss-relief context attached, while the claim window is still open. Founding members use the tracker free.

Information, not tax advice. Whether a specific failure qualifies, and the best year to claim against, depends on your circumstances - confirm with your adviser before filing.

Tero runs these checks automatically.

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