The 2015 budget brought good news for social investors with continued commitment and support shown for the  Social Investment Tax Relief ("SITR"). 

As per the 2014 Autumn Statement, companies benefiting substantially from subsidies for the generation of renewable energy will be excluded from also benefiting from EIS, SEIS and VCTs with effect from 6 April 2015, with the exception of community energy generation undertaken by qualifying organisations which will, in the future, become eligible for the Social Investment Tax Relief (SITR).

The government will allow a transition period of six months following state aid clearance for the expansion of SITR before eligibility for EIS, SEIS and VCT is withdrawn. (Finance Bill 2015).

The government has also committed to a change in the regulatory status of SITR funds so that they can be promoted on the same basis as EIS funds, i.e. SITR funds can be raised through a nominee arrangement. This change will enable a wider range of investors to invest in social enterprises.

The change to the financial promotion treatment comes into effect on 13 April 2015.  

Social investment is being further endorsed with the government now recognising and supporting investment in Social Venture Capital Trusts (Social VCT), with the rate of Income Tax relief set at 30%, subject to state aid clearance.

The aim of the Social VCT is to increase participation in social investment amongst retail investors who want to invest smaller amounts than are generally needed for direct investment whilst bringing benefit to a variety of organisations.

Investors in Social VCT will also benefit through:

• No tax payable on dividends received from a Social VCT
• No capital gains tax payable on disposals of shares in Social VCTs.

Social VCTs will have the same excluded activities as the SITR.

This initiative will be further strengthened with the Government plan to legislate for Social VCTs in a future Finance Bill. So great news for those of you who would like to invest in social enterprise.

If you are interested in finding out more about SITR or Social VCT please contact us as we can guide you through the process .

Written by Violet Spence

As a manager at Sapphire Capital Partners LLP, Violet spends her days assisting clients with SITR, SEIS and EIS schemes for companies and applying to HMRC for advance assurance on behalf of clients.  Contact her by email at Violet@sapphirecapitalpartners.co.uk