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The UK’s home for tokenised equity. Independent news, insight and resources for founders raising capital, investors deploying it, and the firms supporting both — as the regulation, infrastructure and opportunity converge.

What Custody Structure Would Let a Tokenised SEIS Share Satisfy Both HMRC and the FCA? Questions, Questions, Questions!

  • Writer: Shawn Jhanji
    Shawn Jhanji
  • Aug 13
  • 5 min read
This is the question we keep circling back to in conversations with founders and investors, because it is a core piece left to firm up on, in an otherwise settled picture. If a UK seed investor holds SEIS qualifying shares represented as a token, what specific custody and nominee structure lets that token satisfy HMRC's conditions for tax relief and the FCA's rules for holding and trading securities, at the same time, without either regulator having to bend its own framework. Nobody has published a definitive answer. We lay out here what appears to be settled, what is not, and asks the people actually building the plumbing to say where they have got to. What is settled Start with the part that gets treated as uncertain more often than it should be. The SEIS and EIS three year holding period is a condition of the tax relief, not a legal lock on the shares themselves. An investor can sell before three years elapse. Nothing in company law or the scheme rules prevents the transaction. What happens instead is that the investor forfeits the income tax relief on the shares sold early, and may trigger a capital gains liability that the relief would otherwise have deferred or exempted. That distinction, between an economic disincentive and a legal restriction, is the foundation the rest of this argument sits on, and it is worth restating because a surprising number of founders and even some advisers still talk about SEIS shares as though they are contractually frozen for three years.

This is the question we keep circling back to in conversations with founders and investors, because it is a core piece left to firm up on, in an otherwise settled picture.


If a UK seed investor holds SEIS qualifying shares represented as a token, what specific custody and nominee structure lets that token satisfy HMRC's conditions for tax relief and the FCA's rules for holding and trading securities, at the same time, without either regulator having to bend its own framework. Nobody has published a definitive answer.


We lay out here what appears to be settled, what is not, and asks the people actually building the plumbing to say where they have got to.


What is settled


Start with the part that gets treated as uncertain more often than it should be. The SEIS and EIS three year holding period is a condition of the tax relief, not a legal lock on the shares themselves. An investor can sell before three years elapse. Nothing in company law or the scheme rules prevents the transaction. What happens instead is that the investor forfeits the income tax relief on the shares sold early, and may trigger a capital gains liability that the relief would otherwise have deferred or exempted.


That distinction, between an economic disincentive and a legal restriction, is the foundation the rest of this argument sits on, and it is worth restating because a surprising number of founders and even some advisers still talk about SEIS shares as though they are contractually frozen for three years.


Second, Companies House and company register, remains the source of truth for who owns a SEIS qualifying share. Tokenising the share does not change that. The settled model, and the one live pilots are being built around, has the underlying ordinary share issued and filed with Companies House in the conventional way, exactly as it always has been. The token is a tradable representation of an economic and beneficial interest in that share, held through a compliant nominee or custody structure, rather than a parallel legal record that competes with the statutory register.


This is not a novel idea. Nominee structures already sit underneath a great deal of UK equity crowdfunding and employee share scheme administration. Tokenisation changes who can trade the beneficial interest and how quickly, not who the law says owns the underlying asset.


Third, and this is the useful part, pairing tokenisation with PISCES trading windows can compress the realistic liquidity horizon for SEIS investors. The traditional expectation for early stage equity, seven to ten years to any liquidity event, was never a legal requirement, it was simply a reflection of how illiquid unlisted shares are in practice.


A PISCES trading window placed at or beyond the three year point gives SEIS investors a realistic, regulated route to sell without forfeiting relief on shares held past the qualifying period. Liquidity is enabled by this structure. It is not guaranteed by it. Whether a seller finds a buyer at a price they want is still a market question, not a plumbing one.


What is unclear


Here is where the confidence has to stop, and where this piece is deliberately asking a question rather than answering one. HMRC has not published guidance that speaks directly to tokenised SEIS shares held through nominee or custody structures. The Venture Capital Schemes Manual predates the practical emergence of tokenised equity as a live product, and while nothing in it appears to prohibit a compliant nominee structure, silence is not the same as a ruling, and founders and advisers deserve better than an inference.


The practical question underneath that silence is a custody and reconciliation problem, not a tax policy problem. What specific nominee or custody structure would satisfy the FCA's rules on holding client securities, reconcile cleanly and continuously with the Companies House register as the token changes hands on a PISCES trading window, and preserve an unambiguous, HMRC legible record of who held the underlying share and for how long, for the purposes of the three year test.


Those are three different compliance regimes, financial services custody rules, company law filing requirements, and tax relief conditions, that have to line up without any one of them having to compromise on its own terms. Live pilots are reportedly being built to prove this can work in practice. None has yet published the structure publicly in enough detail for the wider market, including rival platforms, tax advisers and the investors actually deciding whether to trust it, to assess it.


There is a live data point that makes this more than an academic exercise. SEIS Advance Assurance applications have been running at record levels this year, and UK seed deal volumes have fallen even as SEIS backed funds keep selling out, evidence that SEIS is doing more of the structural work in the earliest rounds, not less, at exactly the moment this implementation question needs an answer.


The company level SEIS funding cap remains £250,000 lifetime, unchanged in the Autumn 2025 Budget even as EIS and VCT company limits were widened from April 2026, which keeps SEIS squarely focused on the earliest, smallest, most access constrained rounds where this liquidity question matters most to the founders and investors this publication exists to serve.


The case for asking now rather than waiting


The temptation with an open regulatory question is to wait for someone else to answer it first. That instinct under-serves founders. Every week that passes without a published, workable custody structure is a week in which SEIS investors are pricing in the old seven to ten year liquidity assumption on rounds that could, in principle, offer a three year one. That is a real cost, quietly borne by founders in the form of a higher required return, and by investors in the form of capital sitting in shares longer than it needs to.


Getting the implementation question answered, even provisionally, is not a nice to have. It is the difference between SEIS and tokenisation being a valid, improved capital formation mechanism for the earliest UK founders, or remaining two good ideas that have not yet been properly introduced to each other.


An invitation to respond


I am inviting SEIS and EIS tax specialists, digital securities lawyers and PISCES operators, to set out in their own words, with attribution, where they believe the custody and reconciliation structure for tokenised SEIS shares currently stands, and what they think HMRC and the FCA still need to clarify.


We will publish responses, including ones that disagree with each other and with the position set out here.


This piece is general information and an open editorial question. It is not tax or investment advice, and nothing in it should be read as a statement of HMRC or FCA policy. Where we have said HMRC has not ruled, that reflects the absence of published guidance at the time of writing, not a prediction of what any future guidance will say.


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