Results of a survey of EIS managers showing the trends and their sentiment towards SITR.
Social Investment Tax Relief (SITR) is a tax incentive designed to encourage investment into projects and organisations with the aim to deliver social benefits, as well as financial returns It’s based on the existing EIS reliefs with some key differences:
Investments can take the form of shares or unsecured debt*
Investments must be into either a Community Interest Company, a Community Benefit Society or an Accredited Social Benefit Contractor
The maximum allowable investment into an investee organisation is currently capped at approximately £250,000
*The debt must not be secured against any assets, must not repay the principal within the first three years and must not be preferred to any other investment instruments in the event of a winding up.
In the 2014 Autumn Statement, the Chancellor George Osborne announced that the investment limit would be increased to £5 million in any 12 month period and up to £15 million in the organisation’s lifetime. This change is pending, subject to State Aid approval from the European Commission. It is thought that this change would make dedicated retail investment products based on SITR viable, and that as the relief is based on the EIS scheme, current EIS managers may be interested in developing these sorts of products. Therefore, Big Society Capital has partnered with Intelligent Partnership (IP) in an initiative to understand how EIS managers currently perceive opportunities in the SITR investment market. Step one in this initiative was a survey of EIS investment managers.
This survey was carried out over 28 days and was sent out to over 50 EIS managers. We received 22 responses.
The survey was dynamic – answers to the first question were used to place respondents into one of three categories and each category would then be asked a slightly different set of questions. The majority of questions were multiple choice or ranking questions, with a few opportunities for open ended responses. On average, respondents took about 10 minutes to complete the survey.
The following analysis shows the trends and the sentiment of EIS managers towards SITR.