Charities will be able to borrow up to £5m a year under social investment tax relief, in line with recommendations from sector bodies, it was announced in today’s Autumn Statement.
SITR was introduced earlier this year and allows individuals to make investments in charities, including unsecured loans, and claim back 30 per cent of the value of their investment against tax paid. It is designed to encourage individuals to make social investments in not-for-profit organisations.
The government estimates that the measures will cost it £70m in the period to March 2020, suggesting that it expects the sector to receive around £230m of extra investment.
Previously the maximum amount that could be invested under the relief was around £290,000 every three years, although the exact figure depended on the exchange rate against the Euro.
Sector bodies including NCVO and Big Society Capital, the £600m social investment wholesaler, had called for the limit on the relief to be raised to £5m.
The government will also “consult further on a new relief for indirect investment in social enterprises”, it said in the Autumn Statement.
The changes are contingent on the EU granting State Aid approval to the new rules.
Nick O’Donohoe, chief executive of Big Society Capital (pictured), said: “The introduction of the Social Investment Tax Relief in the Budget 2014 provides a powerful incentive to drive more investment into social enterprises helping communities and addressing social issues in the UK.
“There has been enthusiasm from both social enterprises and investors for the relief, but to achieve its potential it is essential that the investment limit is increased and the relief is broadened to allow indirect investments through funds.
“We very much welcome the Government’s announcement and hope the EU Commission will expedite the State Aid approval process that is required for it to be enacted.”
The first SITR deal was done last month with a £70,000 investment into FareShare South West. Other charities looking at SITR deals include FC United of Manchester, a community-owned football club, and the London Early Years Foundation.
