EIS and SEIS Investments on Death: Relief, IHT, and Claims

What happens to EIS and SEIS investments when the investor dies?

1EIS and SEIS shares held for at least 2 years may qualify for Business Property Relief — 100% exempt from IHT under the pre-2026 rules (50% for AIM post-April 2026, but unquoted EIS/SEIS may still get 100%).
2Death does not trigger a clawback of income tax relief already received — relief is not withdrawn on death even if the shares have not been held for 3 years.
3CGT deferral relief under EIS crystallises on death — any deferred gain is extinguished (the gain disappears and is not charged on death).
4The EIS3 certificate and investment documentation should be retained — these are needed to verify IHT relief claims.
5SEIS shares follow similar rules to EIS on death in most respects.

EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) are government-backed investment schemes that offer income tax relief, CGT relief, and potential IHT relief to investors. On death, several important reliefs crystallise — generally in the investor's favour. Executors need to understand what happens to each type of relief.

EIS and SEIS: a brief overview

EIS and SEIS are designed to encourage investment in small early-stage UK companies. The key tax reliefs are:

Relief	EIS	SEIS
Income tax relief	30% of amount invested (up to £1m/year)	50% of amount invested (up to £200,000/year)
CGT disposal exemption	Gain free if held 3+ years	Gain free if held 3+ years
CGT deferral relief	Defer other capital gains into EIS	50% of invested amount can reinvest CGT
IHT relief (BPR)	100% BPR if held 2+ years (trading companies)	100% BPR if held 2+ years (trading companies)

Income tax relief: no clawback on death

EIS and SEIS income tax relief is normally subject to clawback if the shares are disposed of within 3 years. However, death is not treated as a disposal for clawback purposes — the income tax relief already received is not withdrawn when the investor dies, even if they die less than 3 years after making the investment.

This is an important protection for executors and beneficiaries. There is no unexpected tax bill relating to income tax relief on the deceased's EIS/SEIS investments.

CGT deferral relief crystallises on death

EIS allows investors to defer capital gains from the disposal of other assets by reinvesting into EIS shares. When the EIS shares are disposed of, the deferred gain crystallises and is charged to CGT at that point.

Death is a disposal for the purposes of CGT deferral relief — but crucially, any deferred gain that crystallises on death is extinguished. It is not charged to CGT. This is another beneficial treatment for estates with EIS deferral relief.

The EIS3 certificate and documentation relating to the deferral election should be in the deceased's records. The executor may need these when completing the final tax return or IHT forms.

Business Property Relief on EIS/SEIS shares

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EIS and SEIS shares can qualify for 100% Business Property Relief from IHT if:

They have been held for at least 2 years immediately before death
The company is a qualifying trading business (not investment)
The shares are in an unquoted company (which EIS/SEIS companies are)

If these conditions are met, the full value of the EIS/SEIS investment is exempt from IHT. This is the most valuable aspect of EIS/SEIS from an estate planning perspective.

Note: the 2026 changes to AIM BPR (reducing the rate to 50%) do not directly affect unquoted EIS/SEIS companies, which remain at 100% BPR if qualifying. However, the government's appetite for revisiting BPR reliefs should be monitored. See our AIM shares and BPR 2026 guide.

Valuing EIS/SEIS shares for IHT

EIS and SEIS shares are in private, unquoted companies. Valuing them can be complex. The executor should:

Contact the company directly to ask for a share valuation as at the date of death
Alternatively, instruct a specialist valuer with experience of early-stage companies
If the company is worthless (which is common for early-stage investments that failed), the value is nil
If the company has been wound up before death, there may be a loss relief claim available

EIS loss relief allows the investor to set losses (cost minus disposal proceeds) against income or capital gains. If the company failed before the death and the investment was worthless, loss relief may still be claimable on the final tax return.

Practical steps for the executor

Locate all EIS3 and SEIS3 certificates (issued by the companies to confirm qualifying status)
Establish the current status of each investee company — operating, wound up, or sold
Obtain share valuations for IHT purposes
Assess whether BPR is available on each investment
Complete the IHT412 schedule for unquoted shares, applying BPR where appropriate
Consider whether any loss relief claims can be made on the final SA return
Seek specialist tax advice for any CGT deferral elections that need to be dealt with

For full IHT context, see our inheritance tax UK 2026–27 guide. For AIM shares and the 2026 BPR changes, see our AIM shares BPR 2026 guide. For estate administration generally, see the estate administration checklist, complete UK probate guide 2026, and applying for probate guide. For the IHT400, see our IHT400 guide. For CGT on inherited assets, see our CGT on inherited assets guide. For collecting investment assets after probate, see our collecting assets after probate guide. For the executor's first steps, see our executor first steps guide. Farra can help — get started here.