Social Investment Tax Relief (SITR) is a potentially useful tool that is not currently widely used. We believe there is significant untapped potential for SITR to offer additionality within the social economy through direct offers in spite of the low take up to date. This report explores the reasons why and offers ideas in response for testing.
SITR is a tax break for individual investors making investments into social organisations – community businesses, charities and social enterprises – that was launched in 2014 as part of the Government’s drive to make the UK “the easiest place in the world to invest in social enterprise”. A key distinguishing feature of SITR, when compared with other available tax reliefs, is that investments can take the form of either debt (loans and bonds) or shares.
There have been relatively large numbers of SITR-based community share offers through platforms but very few loans. There are community businesses, charities and social enterprises that want risk finance and cannot get it on the terms they want and need it. There are at least some investors who would be keen to make these kinds of investments. We need to find better ways to connect these two groups.