What is Social Investment Tax Relief?
Social Investment Tax Relief (SITR) is the government's tax relief for social investment. It was introduced to encourage individuals to invest into social enterprises, charities and community businesses by offsetting the risk to investors. For eligible social enterprises, charities and community businesses, SITR is a tool that can be used to raise flexible capital for their trading activities. Individual investors can receive a 30% tax break on SITR investments.
The government has published a Call for Evidence on Social Investment Tax Relief, which is due to close on 17 July 2019. We believe this consultation is a valuable opportunity to make SITR easier to use and benefit more organisations.
What we're doing & how you can help
- We have created a short poll to find out how many organisations have plans to grow and what their finance needs are. Organisations responding to the poll will also be able to feed directly into the government's consultation with a template response form.
Are you an investor? If you would like to respond to the consultation, you can find a template response form here.
- We're building a strong evidence base on the impact SITR has already made. If you're aware of any SITR activity, share the information in our SITR deals database.
- We are supporting the government's Taskforce on Social Impact Investing with their research on SITR, which is looking at a number of key recommendations around the restrictions. To find out more about this work, please contact: Tessa Godley, Policy and Strategy Manager.
Free support and resources to use SITR
As part of our ongoing work to make social investment easier for social enterprises and charities to use, GET SITR is an initiative offering free support and resources to better understand and use SITR. You can find out more about what's on offer below. You can also sign-up to our GET SITR mailing list for the latest news and resources.
- Eligibility criteria for SITR
- Essential guide to Social Investment Tax Relief
- SITR FAQs
- SITR case studies
Guidance to use SITR
- Ways to raise investment using SITR
- Help with Advance Assurance
- A simple guide to tax reliefs for charities and social enterprises
- A social entrepreneur's guide to SITR
- A simple guide to financial promotions
Guidance on restrictions
- Changes to the rules in 2017
- Restrictions on leasing, letting assets on hire or licensing
- Issues with subsidiaries
- A guide to SITR and property development
- Guidance on operating concessions
- Ask an Expert: podcast with our tax expert answering questions on trading restrictions and subsidiaries
Big Society Capital has supported a legal consultant to develop example SITR documents by working with some of the first charities and social enterprises using SITR.
The documents below are examples of documents that have been used in the application process, notably the clearance letter sent to HMRC and the individual transaction documents.
Please note these documents are provided by way of example only and are not precedent documents. As such, no reliance should be placed on these documents or the information contained therein. You should be aware that these documents or the information inside them may not be appropriate for your particular circumstances. These documents should only be used in conjunction with independent tax advice.
- Social Impact Bond: Example clearance letter and loan note agreement (social impact bond contractor)
- Loan: Example clearance letter and loan agreement (charity)
Help with an advance assurance application to HMRC
As listed under the guides, we also have resources to help organisations apply for advance assurance. This includes an editable framework for an advance assurance application.
There are a number of ways to raise investment using Social Investment Tax Relief:
- Through a specialist SITR fund managed by a social investor
- With the support of a crowdfunding or peer-to-peer lending platform, which you can use as your vehicle to raise investment via loans or equity (community shares)
- As a direct deal, which essentially means you identify the lenders without the support of an investment intermediary (although you may well engage the support of another sort of professional service such as a lawyer, wealth manager or financial adviser)
Do also watch our webinars where you can hear from experts as well as peers who have already raised SITR investment.
Watch to hear from three organisations who have raised investment using SITR.
Order of the webinar and times:
- Melanie Mills, Big Society Capital - Introduction
- (0:01:10) What is Social Investment Tax Relief
- (0:04:35) Stephanie Limb from Holbrook Community Society talks about how they used community shares eligible for SITR to raise investment
- (0:23:49) Mel Ellis from Challenge Academy talks about how they raised investment through an SITR fund
- (0:38:23) Julius Ibrahim from Second Shot Coffee talks about how they raised investment directly through individuals
- (1:01:10) Questions & Answers
- (1:10:00) Top tips from experts and the panel.
You can watch more of our webinars below. Do also go to our YouTube Channel to see our SITR playlist.
Learn about SITR with our webinars
Ask an Expert: Your questions on SITR
We put your questions to our expert on Social Investment Tax Relief (SITR), Neil Pearson, tax lawyer and partner at Mills and Reeve. You'll also hear from Melanie Mills at Big Society Capital as she explains what you can do to feed into the government's review of SITR so that it's easier to use and more social enterprises, charities and community businesses can use it.
Issues covered include:
- Restrictions around asset leasing & the 20% rule related to trading activities on the 'naughty list'
- Subsidiaries & other issues related to legal structures
- Whether your enterprise can use SITR if it's carrying a net loss
- Structuring an SITR investment at an interest rate on your terms
- How it works alongside other tax reliefs
SITR & SIBs
Listen to our two-part podcast on Social Investment Tax Relief (SITR) and Social Impact Bonds (SIBs).
- Part 1 features Mark Simms, CEO of charity P3, who talks about their experience of SITR and SIBs.
- Part 2 features Katalin Juhasz, Investment Manager at Resonance, with their experience of SITR and SIBs.