Social Investment Tax Relief

Social Investment Tax Relief (SITR), first announced in the Autumn Statement in 2013, was introduced in Finance Act 2014 for investments by individuals after 5 April 2014 and before 6 April 2019, in ‘qualifying social enterprises’. The relief is similar to the existing reliefs under the Enterprise Investment and Seed Enterprise Investment Schemes, giving both income tax and capital gains tax reliefs.

Income tax relief is 30% of the amount invested, up to a maximum investment of £1m, and the investment must be held for at least 3 years.

Capital gains on the investments will be exempt from capital gains tax, again providing the investment is held for at least 3 years. Chargeable gains on other assets arising after 5 April 2014 can be ‘rolled over’ into the social enterprise investment, thus deferring a liability until the latter is sold.

The date of investment for shares will be the date of issue as fully paid up, and for loans it will be the date the investor advances money – or dates if in tranches – after having signed an effective loan agreement.

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