Take-up of the government’s social investment tax relief (SITR) has dropped sharply, according to newly published official statistics.
The government’s provisional figures for the year to April 2018 show that only 20 organisations raised funds through SITR, compared to 30 the previous year and 25 the year before that.
Similarly, just £1.4m was raised through the tax relief in 2017/18, down from £2.5m the previous year and £2.3m the year before that.
In its report, the government says the drop in 2017/18 may be due to changes made to the SITR scheme in 2017.
That year, the amount of investment younger qualifying social enterprises could raise through SITR was increased to £1.5m.
However, to make sure the scheme remained targeted and continued to comply with state aid requirements, restrictions were introduced on recipient organisations.
These restrictions included a cap on employee numbers, and activities such as asset leasing, lending, and operating nursing and residential care homes were excluded.
Overall figures lower than expected
The new figures show that overall £6.7m was raised through SITR in the first four years since the government launched the tax relief in 2014.
This is much lower than expected, with HM Treasury predicting that SITR would be used to support £83.3m worth of social investment in its first three years alone.
Earlier this year, David Floyd of Social Spider CIC criticised the government’s implementation of the relief, saying “dealflow has quickened from snail-like to tortoise-esque”.
The government is currently consulting on changes to the relief, which closes on 17 July.
Big Society Capital has called for restrictions around the relief to be relaxed, including for an increase in the amount of investment to be raised further from £1.5m.