HM Treasury have opened a new call for evidence on Social Investment Tax Relief as take up has been poor and the the relief is currently due to end in 2021.

Social Investment Tax Relief (SITR)  is an income tax and capital gains tax investment scheme relief which provides income tax relief at 30% in respect of investments into qualifying social enterprises.

  • Maximum investment is £1.5 million per investor per year.
  • Gains can be deferred where they are invested into shares or unsecured debt investments that qualify for SITR income tax relief
  • The investment itself is free from CGT if it has been held for at least 3 years and a claim for income tax relief has been obtained and not withdrawn.

To date very few social enterprises have used SITR (about 50 in 2014-2017, raising £5.1m) and the legislation for it includes a sunset clause meaning that without further action from the government the relief will end in April 2021. With this is mind the government is seeking views on how SITR has been used since its introduction in 2014, why its use has been lower than previously anticipated and the design and targeting of the relief.

Views are sought from investors, investees, social enterprises who could have used SITR but have not, as well as those who wanted to use it, but could not.

Questions:

  1. If you are a social enterprise, are you interested in or planning to scale up? How do you intend to achieve this and how much do you hope to raise in investment?
  2. Other than individual investors, what sources of finance do trading social enterprises seek and acquire?
  3. How difficult or easy is SITR to access for social enterprises?
  4. What are the factors that lead to a successful trading social enterprise?
  5. Do you think social enterprises need private investment and for what purposes?
  6. Is tax the most appropriate government lever for supporting funding for social enterprises?
  7. What criteria would be best measure of success for SITR?
  8. Is the SITR limit of £1.5 million appropriate?
  9. If you are an investor, have you made an investment that was eligible for SITR? If not, why not?
  10. Would you invest in social enterprise without tax relief?
  11. What are your expectations when you invest in social enterprise? For how long do you expect to invest? Would you expect/prefer to invest in equity or debt?
  12. Have you used, or considered using, the Enterprise Investment Scheme or Seed Enterprise Investment scheme for impact investing?
  13. If you are a social enterprise, would you use SITR? If not, why not?
  14. As an investor, enterprise or interested party, do you have a view as to why the take up of SITR has been less than expected?
  15. Are you aware of any international examples of similar tax reliefs that have experienced greater take up than SITR?
  16. How did you hear about SITR?

Responses should be submitted to This email address is being protected from spambots. You need JavaScript enabled to view it. by 17 July 2019.

Links to our useful guides:

Social Investment Tax Relief (SITR) 

SEIS: Seed Enterprise Investment Scheme (subscribers)

Which investment relief: IR, ER, SEIS, EIS? 

External link to call for evidence:

Social investment tax relief: Call for evidence

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