Although many investors have heard of the tax-efficient Enterprise Investment Scheme (EIS); many will be less familiar with Social Investment Tax Relief (SITR). SITR was introduced by the UK government in 2014 after extensive consultations with stakeholders in social enterprise. The overriding objective of these investments is to support social initiatives seeking external finance, by providing tax relief to private individuals who invest in them. Thereby, helping to fill the ‘funding gap’ for social enterprises.

SITR offers tax relief to investors who invest in: community interest companies; community benefit societies and charities. It concurrently reduces the costs of capital for social enterprises that need funding to increase the scale of their projects, whilst providing investors with 30% income tax relief.

Although the tax relief is a welcome bonus for many investors, we find that the key reason clients contribute to these schemes is because of the positive impact the investments have on society. For example, contributions could help fund: improving the lives of children, young people and other vulnerable groups; training the long-term unemployed; regenerating communities; and rehabilitating ex-convicts and those struggling with addictions.

Although SITR funds will tend to be diversified across a number of enterprises; they continue to carry a high level of risk and are therefore not suitable for every investor. With high minimum contribution amounts (typically around £20,000), these types of investments tend to be reserved for the wealthy or the more sophisticated investor.

Key Facts

  • Up to 30% income tax relief on the amount invested
  • Capital Gain Tax deferral
  • Interest received on loans is taxable
  • Investments, whether shares or debt, need to be held for a minimum of three years to qualify for reliefs
  • You, as the investor, and the social enterprise, as an investee, will need to qualify for SITR throughout the period of your investment to qualify
  • SITR applies at the point your monies have been deployed

Social investment provides the opportunity for many charities and social enterprises to access capital more easily, to grow and help more people. These organisations help make a real difference in various area such as dismantling poverty, fighting inequality and helping to solve health and wellbeing care.

Contact us

Whether it’s a question about your personal finances or how you can invest your wealth more ethically, we are here to help. Call us on 020 7812 1460, email or complete the form: