A fund which offers 30 per cent tax breaks for lending money to charities has raised £1.3m - the first large-scale application of the relief.
The Resonance Bristol SITR Fund makes use of social investment tax relief, a relief designed to increase lending to charities, which was introduced by the government in 2014.
The relief allows an investor to claim back 30 per cent of the value of an unsecured loan to charity against their tax bill. The relief is only open to individual investors.
EU regulations mean an organisation can only take investment worth less than £290,000 over three years, however the government is seeking to expand that limit, and it expects to to receive state aid approval later this year, which will raise the limit to £5m.
The Resonance fund, the first large-scale SITR fund in the UK, will remain open for eligible investors at quarterly intervals throughout the rest of 2016 and aims to eventually raise up to £5m.
According to a statement from Resonance, the initial £1.3m will used to make the “first three investments in social enterprises in Bristol”. The three social enterprises have been chosen from a short list of 26 which was first drawn up in August 2015.
The Bristol SITR is being sponsored by UBS Wealth Management, which has also been offering the fund to its clients.
Simon Chisholm, investment director at Resonance, said: “We are delighted to have reached our first close for this fund and to be able to start backing Bristol social enterprises which are intentionally helping to rebuild lives and bring change for the better through real businesses.
“Being the first fund of its type to utilise the benefits of SITR at scale, we have seen significant participation in this close from both individuals and also the financial advisors and wealth managers who assist them.”
