Social Investment Tax Relief (SITR) is the government's personal tax relief for social investment which encourages individuals to support charities and social enterprises by helping them access new sources of finance.
It aims to encourage private investors to support social enterprises, very often community interest care companies, that are run on a commercial basis. Individuals receive a 30% tax break when investing into an eligible organisation. In choosing our Strategic Partners, we look for those companies whose efforts really are making a difference to people’s lives at a national level. Our aim is to raise funds capable of creating social impact on a large, tangible scale.
The SITR legislation, from an investor’s perspective, is similar to the Enterprise Investment Scheme, but an investor can commit to the underlying entity by way of loan (whilst for EIS, all investments have to be made by way of equity). Therefore, as well as being able to invest in SITR initiatives by way of equity shares, giving immediate income tax and CGT benefits as well as credit and Capital Gains tax deferral if losses are suffered, it is possible to invest in debt instruments such as loans.
This will be of great significance to advisers and their clients who are seeking a degree of capital protection, which will no longer be available following the 2017 Autumn Budget changes to EIS/SEIS/VCT. Although loans to SITR companies cannot be formally secured on assets such as property, they can benefit from being “asset-backed”. Thus, in addition to the initial 30% tax credit, investors can receive (taxable) coupons from their loans, with a lower risk ranking than pure equity investment.
We are working with a number of social enterprises to raise funds where investors can take advantage of the benefits of SITR and contribute to a positive social impact, the first of which is Young London Today.
To know about about the Adolescent Care SITR Fund, please click here .