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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.
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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) |
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 However, death is not treated as a disposal for clawback purposes — the income tax relief already received is not withdrawn when the investor dies, even if they die less than 3 years after making the investment.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.
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.
EIS and SEIS shares can qualify for 100% Business Property Relief from IHT if:
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.
EIS and SEIS shares are in private, unquoted companies. Valuing them can be complex. The executor should:
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.
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.
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