Social Investment Tax Relief
One of the new tax reliefs included in the Finance Act 2014 is the Social Investment Tax Relief (SITR) which provides Income Tax and Capital Gains Tax reliefs for investment in social enterprises, such as a community interest companies, charities or community benefit societies, and has similar rules to the Enterprise Investment Scheme.
Subject to meeting certain conditions income tax relief is available at a rate of 30% of the amount invested, up to a minimum investment of £1 million per investor. Relief is given by way of a deduction from an individuals tax liability and can be carried back to the preceding tax year but not prior to 2014/15.
For Capital Gains Tax (CGT), gains of up to £1 million can be deferred through reinvestment in a social enterprise. If the investment is sold or ceases to qualify within 3 years then the deferred gain falls into charge.
Any capital gain arising on the sale of an investment in a social enterprise is tax free, provided the investment is held for at least 3 years.
There are a number of criteria relating to both the investee organisation and the investor – full details on eligibility criteria can be found by clicking here.