Tax Cut_TaxAgility Accountants LondonIn a move designed to help social enterprises access new sources of finance, the Government has unveiled the social investment tax relief scheme, encouraging individuals to support social enterprises by investing funds in qualifying social organisations across the country.

Announced as part of Budget 2014 on 19 March, Chancellor of the Exchequer George Osborne claimed that individuals investing in qualifying social organisations in this manner will receive a reduction of 30 percent of their investment in their income tax liabilities for the year in question.

Why Invest in the Social Investment Tax Relief Scheme

Individuals who choose to make an investment from 6 April 2014 can automatically take 30 percent of their investment cost from their income tax bill for the current tax year, with a minimum period of investment of three years.

If you have chargeable gains during the 2014-15 tax year (and beyond), you can defer your Capital Gains Tax (CGT) payment by investing your gain amount into a qualifying social investment. CGT then becomes due when the investment is sold or redeemed (you’ll also pay no CGT on the investment, but you’ll have to pay income tax on any dividends or investment interest in the standard way).

SITR Investment Criteria

In a bid to ensure all new investment sees its way towards the organisations that most require it there are certain EU regulations both the investment and the organisation receiving an investment must meet.

An organisation seeking to receive social investment must “have a defined and regulated social purpose.” These include charities, community interest groups, and community benefit societies that undertake qualifying activities, have gross assets of under £15 million, and who employ fewer than five hundred people. For approval to receive social investment you must apply to HMRC directly, confirming that you meet said requirements.

Note that you may also receive tax relief on any eligible investments made into social impact bond companies.

Maximum SITR Investment

EU rules declare that qualifying social enterprises can receive €344,827 (approximately £290,000) over a three year period.

Over the same period individual investors can invest up to £1,000,000 of their own money into multiple social enterprises, with these investments being separate to any investment received or given under the Seed Enterprise Investment Scheme and Enterprise Investment Scheme, details of which you can read by clicking the above links.

Policy Changes

The Government launched an open consultation a couple of months ago and are currently taking into consideration all the responses they received from the consultation ahead of making any further policy changes.

Draft legislation, and a summary of the responses they received, is due to be published this autumn, with any new legislation most likely being announced during the next Finance Bill.

Advice on Social Investment Tax Relief Scheme

To speak with a professional to discuss how you can maximise the benefits of supporting social enterprises through personal investment, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.


This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.