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Big Society Capital calls for Government to broaden its social investment tax relief proposal
Big Society Capital, the social investment bank, today issued a response to the Government’s proposals for a Social Investment Tax Relief, outlining further issues to be addressed.
According to Big Society Capital, the Government should:
1. Ensure simple investment products are eligible (including unsecured loans);
2. Increase the size of eligible investment into social sector organisations;
3. Extend the range of permitted indirect investment schemes (to include VCT-like schemes); and
4. Permit investment into social impact bonds.
Big Society Capital has provided a detailed response to the consultation, which is available at www.bigsocietycapital.com/publications. Critically Big Society Capital believes that the scope of the tax relief should not be narrowly-focused, but relevant to wide range of social sector organisations and social investment products, and tailored to the products in the greatest need by social sector organisations.
In particular the proposals set out by the government would exclude tax relief for Social Impact Bonds (SIBs), just at a point where the opportunity exist to stimulate a market that is starting to show success. To date fourteen SIBs have been issued in the UK, with the potential for many more in the near future.
Nick O’Donohoe, Chief Executive of Big Society Capital said:
“The Government’s commitment to establish a social investment tax relief is a timely initiative with the potential to transform the social investment market.
For the social investment market’s next phase of growth, individual investors are vital, and tax relief is a proven policy lever which can drive this. With the right incentives individual investors could invest up to £480 million1 in social sector organisations over the next five years. However getting the terms of the tax relief right will be essential and there are some critical issues that still need to be addressed if it is to be effective.”