Spring Budget 2017 – Changes to Social Investment Tax Relief (SITR)

Social Investment Tax Relief (SITR) allows individuals to claim tax relief of 30% of the cost of their investment in qualifying organisations. Qualifying organisations are those that have a defined and regulated social purpose. The investment can take the form of shares or loan capital.

As announced at Autumn Statement 2016, the Government wants to encourage more investment in social enterprises, and proposes to:

  • increase the amount of investment a social investment may receive over its lifetime to £1.5 million. This measure is for social enterprises that receive their initial risk finance investment no later than seven years after their first commercial sale. The current limit is €344,827 over a three year period, and will continue to apply to older social enterprises.
  • reduce the limit on full-time equivalent employees from 500 employees to below 250 employees.
  • exclude certain activities, including asset leasing and on-lending. Investment in nursing homes and residential care homes will be excluded initially, although there will be an accreditation system to allow such investment to qualify for SITR in the future.
  • exclude the use of money raised under the SITR to pay off existing loans.
  • clarify that individuals will be eligible to claim relief under the SITR only if they are independent from the social enterprise.
  • introduce a provision to exclude investments where arrangements are put in place with the main purpose of delivering a benefit to an individual or party connected to the social enterprise.

The changes will take effect for investments made on or after 6 April 2017.

These changes are aimed at making SITR more widely available to investors.