The Social Investment Tax Relief (SITR) scheme
The Social Investment Tax Relief (SITR) scheme is the Government’s new tax relief scheme to encourage individuals to support social enterprises and to assist social enterprises access new sources of finance. The scheme is available for investments made on or after 6 April 2014.
Individuals making an eligible investment 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. Individuals can also defer their Capital Gains Tax (CGT) liability and benefit from capital gains disposal relief.
Under EU rules governing the initial introduction of the SITR, approved social enterprises can only receive a certain amount of government subsidised investment. A social enterprise must be a community interest company, a community benefit society, with an asset lock or a charity. In addition, the social enterprise must have fewer than 500 full-time equivalent (FTE) employees, not more than £15 million in gross assets immediately before the investment and not more than £16 million in gross assets immediately after the investment.
Individual investors can invest up to £1,000,000 and can invest in more than one social enterprise. This is independent of any investments under the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme which are subject to their own annual investment limits.