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Data reveals £9.2 million raised through Social Investment Tax Relief ahead of Government’s call for evidence
The Government has published a call for evidence on Social Investment Tax Relief (SITR), a tax relief for individual investors incentivising investment into social enterprises and charities through a 30% tax relief against the value of any investment.
Official statistics published by HMRC indicate approximately 50 social enterprises have raised £5.1 million of investment through SITR from 2014 to the end of the tax year 2016-171. This is lower than predicted, however, more up-to-date data from Big Society Capital’s open-source database reveals at least £9.2 million has been raised2.
Increasing eligibility will be Big Society Capital’s number one ask of Government, as whilst restrictions were put in place due to legitimate concerns, the criteria are currently too limiting and have been inhibiting take-up.
Separately, we would call for the limit on organisations older than seven years applying for SITR to be reviewed as it is not relevant for this sector. An increase in the maximum amount of investment eligible for relief (lifetime limit) of £1.5 million should also be considered by the Government, as this would take account of larger enterprises with greater social impact.
Cliff Prior, CEO of Big Society Capital, commented:
“Big Society Capital believes that Social Investment Tax Relief (SITR) has great potential as a method of supporting social enterprises and charities. It is a vital measure to help tackle important social challenges which will save public money and improve the lives of people living in disadvantage. Although take-up levels have been lower than first anticipated, we believe this can change providing the Government makes amendments to the relief following feedback from the industry. Our belief is backed by a 2018 Europe-wide study, which ranked SITR as the fourth most effective tax incentive for promoting investment into SMEs and start-ups3.
“We will be speaking with social enterprises and other organisations to ensure as many views as possible are presented to the Government. We look forward to responding to the Government’s consultation, and working together to make the SITR process simpler and more accessible.”
The call to evidence aims to enable the Government to understand how SITR has been used since its introduction in 2014, including levels of take up and the impact on social enterprises and charities’ ability to access finance. It will also help inform the decision regarding whether the relief should be continued beyond April 2021, its current end date.
NOTES TO EDITORS
1 Enterprise Investment Scheme Seed Enterprise Investment Scheme and Social Investment Tax Relief – HMRC, May 2018
2 Social Investment Tax Relief (SITR) Investment Deals Database – Big Society Capital
3 Effectiveness of tax incentives for venture capital and business angels to foster the investment of SMEs and start-ups – European Commission, 2017
ABOUT BIG SOCIETY CAPITAL
Big Society Capital improves the lives of people in the UK by connecting social investment to social enterprises and charities.
We know that investment can help social enterprises and charities achieve more. We believe the greatest chance to improve lives comes when investors and enterprises are both motivated by social mission.
We engage with investors, fund managers, social enterprises and charities to make it easier to use social investment. With our co-investors, we have made over £1.7bn of new capital available to organisations with a social mission, through investments into fund managers and social banks. We have a special focus on: providing homes for people in need; supporting communities to improve lives; and early action to prevent problems.
Kathryn Mortimer, Press Officer, Big Society Capital
T: 020 7186 2537, E: email@example.com