Investors in the UK finally learn more details about the Social Investment Tax Relief (SITR) since the government briefly addressed it last fall. Today, on Budget Day and as promised in a roadmap concerning the country’s social investment plans, the government announced the tax relief rate and the maximum investment amount an organization can receive.
Just how much of a break will investors get? The government has set the tax relief at 30 percent. This is the same rate individuals can apply against income tax liability for investing under the Enterprise Investment Scheme and Venture Capital Trusts. Eligible organizations for the SITR can receive a maximum investment of about £290,000 over three years under the scheme. These organizations would include charities, community interest companies, and community benefit societies as well as social impact bonds accredited by a government-run accreditation process. A word about charities: in the UK context, some charities have trading arms, and from a consultation on the SITR, charities were thought to be an integral part of the social enterprise sector. The SITR will come into effect on April 6, 2014 as planned.
Significant steps to implement the SITR began around the same time last year, when Big Society Capital commissioned a study to determine whether providing tax incentives would be the right move for the country. The report found that wealthy investors would be enticed make social investments if there was an incentive, and it would release an estimated £480 million over five years for social enterprises. So in hopes of creating “the right conditions for social enterprise to thrive in the UK”, says MP David Gauke, the SITR was created.
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