All company types

Tax and compliance for UK pre-seed founders before the first raise.

The decisions you make before your first raise set the structure you will carry through every subsequent funding round. Getting SEIS eligibility right, claiming pre-trading expenditure within the <a href="https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46351">seven-year window</a>, banking trading losses so they are available against future profits, and handling the section 431 election clock on your founder shares are all easier to do correctly now than to unwind after investment lands.

Get in touch
£250k
Maximum SEIS raise for eligible companies: gross assets under £350,000, fewer than 25 FTE, within 3 years of starting to trade
7 years
Pre-trading expenditure window: costs incurred within 7 years before trade starts are treated as a deduction on the first day of trading
14 days
Section 431 election deadline: founders and employees acquiring restricted securities must make the joint election within 14 days of acquisition

What makes pre-seed founders tax different.

SEIS eligibility is easy to lose before it matters

SEIS has strict conditions on <a href="https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme">gross assets, employee headcount, company age and the nature of the trade</a>. Many founders inadvertently breach one of these before they begin investor conversations. The window to check and correct eligibility is before investment, not after. An accidental breach can close the SEIS route entirely.

Pre-trading costs are claimable but only within a seven-year window

Expenditure incurred before a company formally starts trading is allowable as a deduction if it would have been deductible as a trading expense and falls within <a href="https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46351">seven years before trade began</a>. The window closes whether or not you claim it. Failing to identify these costs before the first accounts are finalised is leaving a real deduction unclaimed.

Pre-profit startups should still file to bank their losses

A cash-burning startup that does not yet have revenue still needs to file its Corporation Tax return. <a href="https://www.gov.uk/guidance/corporation-tax-calculating-and-claiming-a-loss">Trading losses carry forward</a> and set against future trading profits. Failing to file means those losses are not formally recognised, and they cannot reduce the tax bill once profits arrive.

The section 431 election is a 14-day clock, not optional advice

Where founders or employees acquire restricted securities, a <a href="https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450">section 431 joint election</a> must be made within 14 days of acquisition. Missing it means the unrestricted market value at the point restrictions lift is taxed as employment income. This is one of the most common and expensive formation-stage errors, and it cannot be corrected after the deadline passes.

How we help pre-seed founders.

SEIS eligibility review before investor conversations

We review your company's structure, age, <a href="https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme">gross assets, headcount and trade</a> against the SEIS qualifying conditions and identify any issues before you start approaching investors. Where advance assurance from HMRC is the right step, we support the application.

Pre-trading expenditure identification and loss banking

We identify the expenditure incurred before your trade started, confirm it falls within the <a href="https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46351">seven-year window</a>, and ensure it is correctly treated in your first accounts. We also file your CT return to bank trading losses even before you have taxable profits, so they are available when you do.

Founder share hygiene and section 431 election

We advise on share structure at formation, identify whether a <a href="https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450">section 431 election</a> is needed on your shares, and prepare the joint election documentation within the 14-day window. We also bridge to SEIS readiness and, when you are trading, to optimal salary and dividend structuring.

Common questions

What makes my company eligible to raise under SEIS?
To raise under SEIS, your company must have <a href="https://www.gov.uk/guidance/venture-capital-schemes-apply-to-use-the-seed-enterprise-investment-scheme">gross assets of no more than £350,000, fewer than 25 full-time-equivalent employees, and must be within three years of starting to trade</a> at the time of the investment. The total SEIS raise across the company's lifetime cannot exceed £250,000. There are also qualifying trade conditions; speak to us about your specific business model.
Can I claim costs I paid before the company started trading?
Yes, if they fall within the rules. <a href="https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46351">Pre-trading expenditure is allowable</a> if it was incurred within seven years before the trade started and would have been deductible as a trading expense had the trade already been running. The costs are treated as incurred on the first day of trading. Personal costs paid before incorporation may need different analysis.
What is a section 431 election and when is the 14-day deadline?
A <a href="https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450">section 431 joint election</a> is made by the company and the individual who acquires restricted securities. It means the individual is taxed up front on the unrestricted market value, rather than on the higher value that applies when restrictions lift. The election must be made within 14 days of acquisition. Missing it is not recoverable. This is general guidance; speak to us about your specific position.
Should I file a return if my startup made a loss this year?
Yes. Filing your Corporation Tax return banks the <a href="https://www.gov.uk/guidance/corporation-tax-calculating-and-claiming-a-loss">trading loss as a carry-forward</a> against future profits. A startup that does not file loses the ability to offset those losses when the company becomes profitable. The loss is real value; it needs to be formally recognised.
I am a solo contractor, not a startup founder. Can you help?
For contractor-specific IR35 and off-payroll questions, the right place is our sibling site Contractor Tax Accountants, which is scoped to that audience. If you are building a product or technology company with co-founders, employees or plans to raise, we are the right fit.

Speak to a startup tax specialist.

Tell us about your pre-seed founders situation and we will reply within 24 hours.

Get in touch