SEIS/EIS for Foreign Investors: Complete Guide (2025)

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are UK government programmes that reward investors who support early‑stage companies. Under SEIS, investors can claim 50% income tax relief on up to £200k invested each tax year. EIS provides 30% income tax relief on up to £1 m (£2 m for knowledge‑intensive companies). These generous reliefs reduce the amount of tax you pay on UK income and remove capital gains tax (CGT) on successful exits. They also offer loss relief if the company fails.

Foreign investors often ask whether they can participate. The good news is that SEIS/EIS for international investors exists. Non‑UK individuals can invest in SEIS/EIS‑qualifying companies, but claiming the tax relief requires satisfying specific conditions. 

This guide explains those conditions, outlines the practical steps to invest, and highlights common pitfalls. Complying with SEIS/EIS rules is complex. Undo Capital helps UK startups automate compliance, manage cap tables and prepare SEIS/EIS documentation for foreign citizens.

Throughout this guide, which follows HMRC SEIS/EIS investor guidance, you will see how having a robust platform reduces administrative burdens and protects both founders and investors.

Can Foreign Investors Use SEIS/EIS?

Many people assume SEIS and EIS are restricted to UK residents. That is not correct. HMRC allows non‑UK investors to benefit from the schemes, provided certain conditions are met. This section addresses the main question: can non‑UK investors claim SEIS/EIS?

HMRC Position on Non‑UK Investors

HMRC does not restrict SEIS or EIS to UK residents. Articles by tax specialists explain that foreign investors are welcome to invest, but income tax relief is only available if the investor has a UK tax liability. In practice, this means you need UK taxable income against which to offset the relief. If you do not pay UK tax, the relief provides no benefit. The Enterprise Investment Scheme Association confirms that only UK taxpayers can claim relief; non‑UK investors can still hold SEIS/EIS shares but will not receive a tax reduction.

Another key point is that investors must not be connected to the company. That means you cannot own more than 30% of the shares, be an employee (director roles may qualify in limited circumstances) or have voting power that allows you to control the company. These independence requirements apply equally to UK and non‑UK investors. They prevent insiders from receiving relief on their own businesses and ensure the scheme supports genuine risk investment.

Tax Relief Requirements for Overseas Investors

If you live abroad but earn income in the UK, you can claim SEIS or EIS relief through your self‑assessment tax return. The relief reduces your UK tax bill; it does not refund foreign taxes or offset taxes paid in your home country. Therefore, foreign investors need to check:

• UK tax liability – Are you taxed on rental income, employment income or other UK‑source income? Without UK tax to offset, SEIS/EIS income tax relief has no value.
• Residency status – HMRC SEIS/EIS residency rules determine whether you pay tax on worldwide income or only on UK income. The schemes do not require UK residency, but the amount of relief depends on your taxable UK income.
• Self‑assessment – Even non‑residents must file a UK tax return to claim relief. HMRC’s guidance explains how to complete the relevant sections using the SEIS3 or EIS3 certificate issued by the company.

An important distinction for EIS non-UK investors, and one of the key SEIS/EIS restrictions for overseas investors, concerns capital gains tax relief. While the CGT exemption on the disposal of EIS and SEIS shares is technically available regardless of residence, EIS CGT deferral relief, which allows investors to defer gains from other asset disposals, is only available to UK residents.

In practice, as Deloitte notes, the CGT exemption is usually only relevant to UK residents anyway, because non-UK residents are generally outside the scope of UK capital gains tax on share disposals unless specific UK property rules apply.

Don’t Forget the Permanent Establishment Rule

Investors sometimes worry that the company itself must be UK‑incorporated. Foreign companies can qualify if they have a permanent establishment in the UK. This means a fixed place of business (such as a branch, office or co‑working space) or an agent with authority to enter into contracts. The foreign parent, not just its subsidiary, must maintain the UK establishment for at least three years. The company must still meet the age, gross asset and trading activity thresholds for SEIS/EIS. For investors, this rule ensures your money goes into a business with real UK operations.

SEIS/EIS Eligibility Rules for Foreign Investors

Understanding SEIS eligibility for foreign investors and the wider eligibility criteria helps you decide whether SEIS or EIS suits your situation. The rules cover residency, investor independence, share HRMC requirements, and holding periods. Below you will find a concise summary based on HMRC guidance and industry experts.

Residency and Tax Liability

Being a non-UK resident does not disqualify you from SEIS or EIS. What matters is your liability to UK income tax and your eligibility for UK tax relief for foreign investors. The Folio Partners guide clarifies that income tax relief is available to both UK and non-UK residents, provided they are UK taxpayers. In practice, SEIS and EIS income tax reliefs are available to both UK and non-UK residents who pay UK tax, which is a key point for EIS eligibility for non-UK investors. This means you can live overseas and still claim relief if you have taxable UK income.

However, capital gains tax (CGT) benefits are more restricted. Non‑UK residents may enjoy exemption on gains realised from disposals of SEIS/EIS shares, but CGT deferral relief applies only to UK residents. This means that when you sell your shares, you might be taxed in your home country instead. Review your country’s tax treaty with the UK (see the double taxation section below) to see whether you can avoid double taxation on capital gains.

Investor Independence Requirements

HMRC imposes strict rules to ensure investors take genuine risks. In short, only individuals qualify; you must not be an employee or own more than 30% of the company, and you cannot invest through “connected persons” such as close family. These independence rules apply equally to all investors.

Holding Period Requirements

You must hold SEIS/EIS shares for three years, or HMRC will claw back the relief. Disposing of shares early or if the company loses its qualifying status within the period will result in a tax charge.

How Foreign Investors Can Invest in a UK Startup Using SEIS/EIS?

Investing through SEIS/EIS is a structured process. Think of it as five checkpoints:

1. Check your tax position – Ensure you have UK‑source income and meet residency and independence requirements.
2. Obtain advance assurance – Verify that the company has HMRC’s pre‑approval before committing funds.
3. Invest and receive ordinary shares – Pay cash for full‑risk ordinary shares and receive proper documentation, including share certificates and a clean cap.
4. Wait for compliance certificates – The company must trade for four months or spend 70% of funds, then file a compliance statement. HMRC will issue SEIS3/EIS3 certificates when satisfied.
5. Claim relief – Use your SEIS3/EIS3 certificate to complete your HRMC self-assessment tax return within five years of the tax year of investment, in line with UK startup investment rules.

Undo Capital assists at each stage by guiding founders through advance assurance, generating compliant documents, tracking cap tables and reminding investors when to claim relief.

Practical Considerations for Non‑UK Investors

Cross‑border investing involves more than choosing the right company. Here are some quick points to keep in mind:

• Double taxation agreements (DTAs) – DTAs prevent you from being taxed twice on the same income. Check whether your home country has a treaty with the UK and obtain a certificate of overseas residence from your tax authority to claim relief.
• Sending funds – Use regulated banks or platforms and keep copies of bank statements and payment confirmations. HMRC may ask for proof that your money was used to buy ordinary shares.
• Documentation – The company must produce subscription agreements, board minutes, share certificates and a cap table. Investors should keep these documents to support their tax claim and show evidence of ownership.
• Evidence – Inconsistent or missing paperwork can lead to HMRC refusing relief. Organise your records and use a platform like Undo Capital to store them securely.

Common Mistakes Foreign Investors Make (and How to Avoid Them)

International investing is fraught with traps. Avoiding these mistakes will save you time and protect your tax relief.

Common Mistakes (and How to Avoid Them)

Foreign investors often stumble over the same errors. Here are the big ones:

• Thinking relief is automatic – You must have UK tax to offset and file a self‑assessment return using your SEIS3/EIS3 certificate.
• Skipping advance assurance – Without HMRC’s pre‑approval, your investment may not qualify. The company must follow the correct sequence when issuing SEIS and EIS shares.
• Accepting the wrong share class – Relief only applies to full‑risk ordinary shares; preference or redeemable shares do not qualify.
• Missing deadlines – Investment compliance statements and self‑assessment returns have strict timelines. Missing them can result in lost relief. Using reminders or automation helps you stay on track.

For more pitfalls, see our internal guide on common SEIS/EIS mistakes.

How UK Startups Should Prepare for Foreign Investors?

Startups seeking international capital must ensure their SEIS/EIS status is watertight. Without proper preparation, foreign investors may face problems claiming relief.

Prepare Your Startup

To attract foreign capital, founders should:

• Secure advance assurance – Apply early and keep your plans consistent; investors want evidence that HMRC will approve the shares. Undo Capital helps you prepare the application.
• Issue the right shares – Only ordinary shares qualify. Review your articles and use templates that avoid preference rights.
• Maintain a clean cap table – Present clear ownership before and after investment, issue share certificates promptly and file SH01 forms.
• Be foreign due diligence ready – KYC and AML checks require transparent documents. Provide evidence of how the remitted funds for the UK startup will be used, and keep your paperwork in order.

Example Scenarios

• European angel – An investor living in Germany with UK rental income invests in a SEIS‑qualifying startup. She obtains advance assurance, receives ordinary shares and claims 50% tax relief against her UK income. Thanks to a double taxation agreement, she avoids being taxed twice.
• US investor – A US‑based individual with no UK tax liability invests under EIS. He cannot claim income tax relief, yet he still invests for growth. He holds ordinary shares for three years and pays US tax on gains.
• Singapore seed fund – A seed fund invests in UK startups via its partners who have UK income. The partners claim SEIS/EIS relief in line with the SEIS/EIS tax relief requirements; the fund uses advance assurance and issues ordinary shares. Double taxation is avoided under the Singapore tax treaty.

How Undo Capital Helps Both Sides: Startups and Foreign Investors?

Undo Capital is a fintech platform designed to automate SEIS/EIS compliance through Undo Capital SEIS/EIS automation. It supports founders and investors throughout the process:

• Advance assurance – Undo Capital guides startups through HMRC’s advance assurance application, ensuring required documents and investor details are submitted correctly.
• Document generation – The platform produces subscription agreements, board minutes and share certificates, ensuring that shares are ordinary and fully paid.
• Cap table management – It maintains a dynamic cap table, tracking shareholders and share classes. This helps founders prepare accurate compliance statements.
• Investor onboarding – Undo Capital collects investor details, monitors eligibility (including independence requirements) and stores SEIS3/EIS3 certificates securely.
• Compliance monitoring – It reminds founders of filing deadlines and ensures that funds are used on qualifying business activities. Investors can access documents to support their tax claims.

Using Undo Capital reduces administrative burdens and minimises the risk of mistakes. For startups working with foreign investors, having an automated system ensures that cross‑border complexities are handled correctly.