Local Authority spending in England was cut by 20% between 2010 and 2015 which leaves what is nicely called a ‘funding gap’. Authorities do not have the money to fund social projects to the extent that they used to. The Government introduced SITR last year in order to make it easier and financially attractive for individuals to become social investors and help fill this gap by investing in social projects. The tax reliefs for SITR are the same as for Enterprise Investment Schemes, that is 30% income tax relief, CGT liabilities can be deferred, returns are exempt and losses can be offset against income tax payable that year. Also like an EIS, investments must be held for at least 3 years. Currently there is a big difference in investment limits, broadly £250,000 for SITRs as against £15 million for EISs, though the government has applied for EU clearance to raise the SITR level to the same as an EIS.

Social Investment Tax Relief

In a recent survey, 71% of IFAs reported that their clients ‘would be prepared to accept a reduced potential return in order to achieve their philanthropic or community based goals.’ The market is clearly there though it may well be prudent to wait until the sector has matured a little before committing money to it.


The above is the lead article in our monthly News Notes. Please click here for information regarding these notes.