Autumn Statement 2014: Social Investment Tax Relief (SITR) changes

SITR is a tax relief available to individuals investing in a ‘social enterprise’. A ‘social enterprise’ is a commercial business that helps people or communities.

The requirements that must be met in order to claim the relief broadly follow those for EIS relief.

SITR is state aid granted under the European Commission’s regulations on ‘de minimis aid’. The scheme under which aid is given must cap the total amount available to an enterprise from all forms of ‘de minimis aid’ – this must be no more than €200,000 in any 3 year period. An investment will not qualify for SITR if the available tax reliefs on that investment, taken together with any other ‘de minimis aid’ received in the 3 years up to and including the date of the investment, exceed €200,000.

SITR will be in place for investments made, or capital gains arising, in the period from 6 April 2014 to 5 April 2019.

An individual can claim one or more of the following reliefs, in respect of an investment in one or more social enterprises:

  • Income tax relief – at 30% of the amount invested
  • Capital gains hold-over relief
  • Capital gains disposal relief – an investment which has attracted income tax relief is exempt from capital gains tax on any gain

The government will seek EU approval to increase the investment limit to £5m a year per organisation up to a maximum of £15m per organisation and to extend the relief to small-scale community farms and horticultural activities. These changes are expected to come into effect on or after 6 April 2015, subject to State Aid clearance.