Social Investment Tax Relief

Social Investment Tax Relief

 
The government’s new tax relief scheme for social investment encourages individuals to support social enterprises and helps social enterprises access new sources of finance.
 
  • How investors benefit – Individuals making an eligible investment at any time from 6 April 2014 can deduct 30% of the cost of their investment from their income tax liability for 2014/15 (or the relevant later year in which the investment is made). The minimum period of investment is 3 years. If individuals have chargeable gains in 2014-15 (or a later year) they can also defer their capital gains tax (CGT) liability if they invest their gain in a qualifying social investment.

 

  • Eligibility – Organisations must have a defined and regulated social purpose. Charities, community interest companies or community benefit societies carrying out a qualifying trade, with fewer than 500 employees and gross assets of no more than £15 million may be eligible. Other conditions and criteria also apply, which can be found in the HMRC guidance.

 

  • How enterprises apply for approval – Social enterprises can apply to HMRC to confirm that they meet the requirements of the scheme. Investors will be able to claim tax relief once this confirmation has been given.

 

  • Maximum amount of SITR investment – Under EU rules governing the initial introduction of the social investment tax relief, individual enterprises can only receive a certain amount of government subsidised investment. The limit is €344,827 (about £290,000) over three years. The exact sterling equivalent is the spot exchange rate on the date of investment. Individual investors can invest up to £1,000,000 and can invest in more than one social enterprise.

 

For more information please click on the following link – HMRC guidance on SITR – or contact rob.parker@cabinet-office.gsi.gov.uk.