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what is social investment tax relief?

By Kevin Russell | 19 July 2014

what is social investment tax relief

Social Investment Tax Relief (SITR) is a new tax relief, available for investment into eligible social enterprises, from 6 April 2014. The investment, and the organisation receiving it, must meet eligibility criteria.


Eligible social enterprises include Community Benefit Societies, charities and Community Interest Companies.


HMRC has now published separate guidance documents for social enterprises and for investors. The guides explain the conditions social enterprises must meet so investors can claim SITR, and the conditions investors must meet before claiming SITR.


HMRC have also published guidance on the process that social enterprises must follow to get a Compliance Certificate so that their investors to make a successful claim to SITR. Also, a Compliance Statement form that Social enterprises must use to request HMRC’s permission to issue Compliance Certificates to investors.


All of the documents can be accessed here:


Further comment:

Whilst the idea of a social investment tax relief is a good one, there are tightly drawn conditions and financial limits that, overall, mean that the Scheme is not that attractive. The financial limits are necessary in order to comply with European law. However, the Government has stated that it intends to seek consent from Europe to increase these limits, which will open up the Scheme to a wider audience.


SITR works on the basis of investment into newly issued shares or qualifying loan finance. One of the concerns expressed by the charity sector during the formulation of the SITR Scheme was that the rate of tax relief should be set at a level that would potentially cause a shift away from Gift Aid donations. It remains to be seen if there will be any adverse impact as a result of would be donors shifting to SITR investment.


Image by Laineys Repertoire, used under Creative Commons Licence

Posted by Kevin Russell

Our Legal Eagle guru and Stewardship's Technical Director, Kevin constantly has his finger on the pulse of all things tax and charity law-related. His briefing papers for charities, churches and individuals are an invaluable resource on everything from VAT to Gift Aid. 


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