Changes to Social Investment Tax Relief | KPMG | UK
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Changes to Social Investment Tax Relief

Changes to Social Investment Tax Relief

Changes to SITR increase the amount raised from individual investors but extend the list of excluded activities.


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The Government has confirmed changes to the existing rules for Social Investment Tax Relief (SITR) in the form of draft legislation and a policy paper. Broadly, these changes increase the amount social enterprises can raise from individual investors, extend the list of excluded activities and broaden the anti-avoidance rules. The changes are to take effect for investments made on or after 6 April 2017.

The key changes to the existing SITR rules as set out in the draft legislation and policy paper are summarised below:

  • The amount of qualifying investment a qualifying social enterprise can raise will in most cases increase to a maximum of £1.5 million over its lifetime (there is currently a three year rolling limit of €344,000);
  • The increased investment limit will be available to qualifying social enterprises up to seven years after their first commercial sale. For older social enterprises, the existing limits of the current de minimis State aid scheme will continue to apply;
  • The maximum number of full time equivalent employees of a qualifying social enterprise is to be reduced from 500 to 250 (it is noted that volunteers don’t count towards this limit);
  • To ensure investors are independent from the social enterprise, individuals will not be eligible to invest under the SITR unless any other investments made by that individual in the social enterprise, including loans, were made under the SITR;
  • Social enterprises will not be able to use money raised under the SITR to replace an existing loan;
  • The list of excluded activities will be extended so that SITR will no longer be available for: 
    • all energy generation activities
    • leasing (including letting ships on charter or other assets on hire);
    • providing banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial services to social enterprises; and
    • operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home.
  • Similar anti avoidance rules to the disqualifying arrangements requirements in the EIS and SEIS rules will be introduced for SITR; and
  • At a later date there is an intention to introduce an accredited scheme for affordable social care through regulations.These changes are broadly welcome, especially the increase in the overall investment limit.


For further information please contact :

Joe Grimes

Brian Miles

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