SEIS & EIS: the real downside maths every UK angel should memorise

Most angels think a £10,000 SEIS cheque puts £10,000 at risk. For a taxpayer who claims the reliefs, the real number is £2,750.

The SEIS arithmetic

You invest £10,000 in a SEIS-qualifying company.

SEIS income-tax relief returns 50%. That is £5,000 off your income-tax bill for the year.

If the company fails outright, loss relief applies to the remaining £5,000 at your marginal rate. For an additional-rate (45%) taxpayer that is another £2,250.

True downside: £2,750, or twenty-seven and a half pence in the pound.

The EIS arithmetic

EIS works the same way at a 30% relief rate. On £10,000: £3,000 of income-tax relief, then loss relief on the remaining £7,000 at 45% is £3,150. True downside: £3,850, or 38.5p in the pound.

The catches the paperwork hides

The relief isn't yours until you claim it. You need the SEIS3/EIS3 certificate from the company, and the claim window closes five years after the 31 January following the tax year in which you invested.

Selling within three years claws the relief back. The holding period is part of the deal.

The rates above assume an additional-rate taxpayer with enough income-tax liability to absorb the relief; at 40% the numbers shift slightly.

Why this changes portfolio construction

If your true downside per position is 27.5–38.5% of the cheque, the case for more, smaller positions strengthens: ten £5,000 SEIS cheques risk about £13,750 in total, less than the perceived risk of three £10,000 cheques. Yet most UK angel portfolios hold fewer than ten positions.

Tero's portfolio view computes the net exposure per position automatically, chases missing certificates, and watches every claim deadline. Information, not tax or investment advice. Confirm your position with your accountant.