Social Investment Tax Relief consultation (2019) - our response

Why consult?

The aim of the call for evidence was to enable government to understand how the Social Investment Tax Relief (SITR) had been used since its introduction in 2014, including levels of take up and what impact it has had on social enterprises’ access to finance. SITR has a sunset clause which will bring the scheme to an end in April 2021, and this call for evidence was designed to help inform a decision about the future of the relief.

What are our recommendations?

• Remove the rules under Section 257MJ of the Income Tax Act 2007 that make investments supporting activities that HMRC would not consider to be a ‘trade’ ineligible for SITR
• Make the community ownership and leasing of assets eligible for SITR (14.24 to 14.30 below)
• Remove renewable energy generation and export from the excluded activities list for SITR (see 14.31 to 14.36 below)
• Remove production of primary agricultural products from the excluded activities list for SITR (see 14.37 to 14.39 below)
• Make property development by an asset locked community benefit society eligible for SITR (see (14.40 to 14.42 below)
• Establish criteria and a checking process that allows certain co-operative societies to benefit from SITR (see 14.43 to 14.51 below)
• Create a 50 percent tax relief for seed social investments equivalent to SEIS (‘Seed SITR) (see 14.52 to 14.53 below)
• Remove the seven year age limit for businesses offering SITR to investors (see 14.54 to 14.55 below)
• Develop a scheme whereby social investors can ‘gift’ the value of their SITR to the business they are investing in (see 14.56 to 14.57 below)
• Set a clear policy objective for SITR to enable more social investment on the part of engaged stakeholder/beneficiary communities
• Create a Social Entrepreneurs’ Relief by removing the ‘no employee investors requirement’ from SITR
• Increase the lifetime limit to that set for EIS