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Social investment - is it for me?


Social Investment Tax Relief SITRA new scheme was introduced in April 2014 to attract social investment, called Social Investment Tax Relief (SITR). This is a groundbreaking tax relief that allows you to have a reduction in income tax for supporting causes that you care about.

Why is this being offered? Because the government is fully committed to attracting investment into the social sector, believing that it can deliver economic growth, transform public sector services and tackle some of society's toughest issues.  

Many social enterprises work on the front line, working alongside their communities, and they know what works well and what doesn't. They are innovative and are open to adopting new ideas and they can, and do, challenge standard practices. And the good news is that recent economic trends have shown that the social sector is a growing market, with the public sector undergoing ambitious reform and a greater dependence being placed on private social enterprises.

The Government has continued to support SITR by announcing further developments in recent budgets, widening the range of qualifying social enterprises and changing the regulatory status of SITR funds so that they can be promoted on the same basis as EIS funds, i.e. raised through a nominee arrangement. This change will enable a wider range of investors to invest in social enterprises.

There are also plans in progress to extend the level of investment. Additionally the government now recognises and supports investment in a Social Venture Capital Trusts (Social VCT), with the rate of Income Tax relief set at 30%, subject to state aid clearance.  For more information on Social VCTs read our earlier blog "SITR & Social VCT - 2015 budget impact  ".

So what are the attractions of investing in a qualifying social enterprise?

  • your investment will 'do good' as well as produce a return for you;
  • you can use your wealth to reflect your values, and deepen your interaction with communities you care about;
  • you can claim up to 30% income tax relief on the amount invested (SITR or Social VCT);
  • you can defer capital gains by reinvesting in another social enterprise (SITR or Social VCT); 
  • you qualify for capital gains disposal relief.


How can you invest?

You can invest either by:


How much can you invest?

  • You can invest up to £1m a year, however currently each social enterprise can only receive €344,827 per year (this is under review and is expected to increase significantly in the near future).
  • You can invest in more than one social enterprise providing you invest no more than £1m in any given year.

With SITR there has never been a better time to attract investment into you social enterprise or to invest. If you are interested in setting up a social enterprise we at Sapphire Capital Partners can help you structure the investment as well as help you through the process with HMRC. We can also assist with the due diligence process and the steps required to make the investment happen.

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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