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SITR - is the scheme expanding?

SITR expanding the schemeNo sooner was the Social Investment Tax Relief scheme “SITR” launched in April 2014 than HM Treasury published a consultation paper in July 2014 about proposals to expand the scheme.

What we all now want to know is when is this likely to happen?

The good news is that things have been progressing, with the government continuing to expand the scheme, where it can, in the Autumn 2014 and Spring 2015 budgets (see our earlier blog on the subject SITR & Social VCT - 2015 budget impact. The government has also begun the process of seeking the approval of the European Commission (the “Commission”) which it needs to make further changes.

Following discussions with the Commission, the government submitted a formal application in January 2015 for State aid clearance for the enlarged scheme. Discussions with the Commission remain confidential so we are unable to assess how close they are to a conclusion, but the Commission has committed to delivering a response no later than 18 months after formal application.

The Government are keen to progress the expansion of the SITR scheme and it remains their top priority for the social enterprise sector. The HM Treasury consultation paper recognizes the value of the social enterprise sector, advising that it contributes circa £55 billion to the economy and employs over two million people. With the right access to capital, social enterprises can help reduce demand on the state and create more jobs, often in some of the most challenging areas, so we can understand Government’s drive to expand the scheme.

SITR was introduced with an investment limit of €344,827 over three years, and I hear you ask "why"? If the scheme is so important to the Government why would they limit the investment to such a low level? Well the limit was set at this level because it would not require EU State aid approval.

One of the key elements of the expansion plan is to increase the level of investment and the formal application for State Aid clearance requests a significantly higher limit of £5 million per year, up to a total of £15 million per organization. The SITR scheme has continued to widen in respect of the sectors and Commission approval seeks to expand this further through inclusion of community energy and community agriculture.

So the social sector is definitely a growing market, with SITR being of interest to both investors and social enterprises, keen to pursue the opportunities that it brings. We all await EU clearance, hopefully this will happen in 2015 and allow this sector to take an even bigger step forward. 

Social Investment Tax Relief (SITR) FREE eBook

Violet Spence
Violet Spence
Previously a manager at Sapphire Capital Partners LLP, Violet now retired, spent her days assisting clients with SITR, SEIS and EIS schemes for companies and applying to HMRC for advance assurance on behalf of clients. 

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