SEIS carry back: claiming against last year's tax

In short: SEIS carry back lets you treat all or part of an investment as though it had been made in the previous tax year, so the 50% relief is set against that year's income tax liability. It is described in HMRC helpsheet HS393.

Why it exists

Income tax relief can only reduce a liability that exists. Income is lumpy for a lot of people who invest at this stage: a business sale, a bonus year, a period of consultancy. Carry back gives you one year of flexibility so an investment made in a lean year can be relieved against a fuller one.

How it works

You can carry back all or part of the investment. The amount carried back is treated as though the shares were issued in the earlier year, and it counts against that year's £200,000 SEIS limit rather than the current year's.

The limits that still apply

Carry back does not create extra allowance. The earlier year's cap applies, reduced by any SEIS investment already relieved in that year. You also still need enough income tax liability in the earlier year to absorb the relief.

Only one year back is allowed. There is no carry forward of unused SEIS relief to a future year.

How to elect for it

You make the election as part of your SEIS claim, using the SEIS3 certificate and the additional information pages of your self assessment return, or by completing the claim form on the certificate itself. Where the earlier year's return has already been filed, HMRC amends the assessment for that year. The mechanics are in how to claim SEIS relief.

Because carry back changes an earlier year's position, it is one of the areas where an accountant earns their fee. Get the election wrong and the relief lands in the wrong year, or not at all.