Can founders or directors claim SEIS relief on their own shares?
By SuLe · Updated 25 May 2026
Directors can claim SEIS relief on their own shares — but anyone who, with their associates, holds or is entitled to more than 30% of the company's shares, votes or capital is "connected" and gets no relief, which rules out most founders. Employees are excluded outright. EIS is stricter still: paid directors are generally excluded unless the narrow "business angel" rules apply.
Key facts
- Investors who, with their associates, hold or are entitled to more than 30% of shares, votes or capital cannot claim SEIS or EIS.
- Employees cannot claim under either scheme — but directors are not barred under SEIS.
- Under EIS, paid directors are generally excluded unless the "business angel" rules apply.
- SEIS relief is 50% of the amount invested, capped at £200,000 per investor per tax year; EIS relief is 30%.
- Qualifying shares must be new, full-risk ordinary shares, paid up in full in cash at issue.
Why does the 30% connection rule block most founders?
Because SEIS and EIS refuse relief to anyone "connected" with the company, and holding — or being entitled to — more than 30% of its shares, votes or capital makes you connected. Two founders on 50% each are both connected, so neither can claim on a top-up investment.
The rule aggregates your position with that of your "associates", a defined term that pulls other connected people's holdings into your total. The definition is technical, so do not assume a relative's or business partner's stake is ignored — take advice before relying on anyone's holding being outside the count.
Note the words "entitled to": rights to acquire shares can count as well as shares already held. The schemes are designed for outside money, and the 30% line is how the design is enforced.
Can a director claim SEIS relief?
Yes. SEIS excludes employees, but it does not bar directors — so a director who passes the 30% connection test can subscribe and claim the 50% relief. This is one of the most misunderstood corners of the scheme: "founders usually can't claim" is true, but the reason is the 30% rule, not their board seat.
In practice the carve-out helps non-founder directors most. An experienced chair or non-executive who joins the board and invests can claim, provided they and their associates stay at or below 30%.
The ordinary conditions still apply: new full-risk ordinary shares, paid up in full in cash at issue, no preferential rights to assets on a winding up, and no pre-arranged exit or capital-protection arrangements.
What is different under EIS for directors?
EIS draws the line more tightly: paid directors are generally excluded from relief, unless the "business angel" rules apply. Those rules are a narrow exception broadly aimed at genuine investors who later take a paid board role — their conditions are technical, so treat any paid-director EIS claim as a matter for specific advice.
The restriction targets paid directorships. An unpaid director is in a better position, but "unpaid" needs to mean genuinely unremunerated, not paid through a side route.
Employees, as under SEIS, are excluded regardless of how small their stake is.
| Who is investing? | SEIS | EIS |
|---|---|---|
| Employee (no board seat) | No | No |
| Director at or below 30% (with associates) | Yes | Paid directors generally no — unless the business-angel rules apply |
| Founder over 30% (with associates) | No | No |
| Outside angel at or below 30% | Yes | Yes |
How does a qualifying director actually claim?
The same way as any investor: subscribe cash for new ordinary shares, then wait for the company's paperwork. The company submits its SEIS1 compliance statement to HMRC — possible only after 4 months of trading or once 70% of the money raised has been spent — and, once authorised, issues the director a SEIS3 certificate to claim with.
The relief is worth 50% of the amount invested, within the investor's £200,000 SEIS cap per tax year. The shares must then be held for three years, or the income tax relief is withdrawn.
Connection is not a one-day test either — a director creeping over 30% through later share moves puts the relief at risk, so model future allotments before claiming.
Worked example
Brightpath Labs Ltd, a careers-analytics startup, closes a £120,000 SEIS round. Nadia, the CEO, holds 58% — comfortably over 30%, so she is connected and her own £15,000 top-up in the round earns no relief.
Rob is different. A paid product director who joined after incorporation, he holds 8% and his associates hold nothing. He subscribes £20,000 in cash for new ordinary shares, leaving him still comfortably below the 30% line.
Once Brightpath has spent 70% of the round (£84,000) it files its SEIS1, HMRC authorises, and Rob claims £10,000 — 50% of £20,000 — holding the shares for three years. Under EIS, his paid directorship would generally have excluded him unless the business-angel rules applied.
Where founders go wrong
Hearing "directors can claim" and assuming founders can
— the 30% connection rule, counted with associates, catches almost every founding stake.Forgetting associates
— the test aggregates connected people's holdings, so splitting shares around family or partners does not reset the count.Subscribing while on the payroll without a board seat
— employees are excluded from both schemes; the SEIS carve-out is for directors only.Claiming EIS as a paid director
— generally excluded unless the business-angel conditions are genuinely met; get advice before filing anything.
Related questions
Can a co-founder with 25% claim SEIS relief?
Potentially — if they are a director rather than an employee, their stake including associates stays at or below 30%, and they subscribe cash for new full-risk ordinary shares. The 30% test counts shares, votes and capital, and rights you are entitled to, not just shares held today. [More: Is my startup eligible for SEIS?]
Do employees ever qualify for SEIS or EIS?
No — employees are excluded from both schemes, whatever the size of their stake. If you want your team to share in the upside, employee share schemes are the designed route: EMI options give tax-advantaged equity without pretending team members are outside investors. [More: What is an EMI share option scheme?]
What are the EIS business-angel rules?
A narrow exception that can preserve EIS relief for a paid director in limited circumstances — broadly aimed at genuine investors who later take a board role. The conditions are technical and easy to fail, so never assume they apply without specific advice.
How much SEIS relief could a qualifying director get?
SEIS gives 50% income tax relief on up to £200,000 invested per tax year — a maximum of £100,000 of relief annually across all SEIS investments. The shares must be held for three years, or the income tax relief is withdrawn. [More: What is SEIS and how does it work?]
Connection is judged on facts HMRC can check — shareholdings, board minutes, payroll — and a wrong claim unwinds publicly and expensively. A SuLe solicitor can map who on your cap table can genuinely claim before the round closes, and structure the ones who cannot. Book a free SEIS/EIS readiness call and get the answer in writing before anyone files.
Keep reading: What is SEIS and how does it work? · SEIS vs EIS — what's the difference? · Is my startup eligible for SEIS? · What are SEIS1 and SEIS3 forms? · What is an EMI share option scheme?
Primary sources: HMRC — Tax relief for investors using venture capital schemes · HMRC — Apply to use the Seed Enterprise Investment Scheme
