Posted by on 3 July 2014 | Comments

Paul Bulzacchelli Managing Director at Inspired Accountants, explains how the social investment tax relief (SITR), as announced in April’s Budget, can help social enterprises, charities and investors.

“SITR allows anyone lending money to a social enterprise or charity to reclaim 30 per cent of their loan in tax relief.  It applies to the first £284,000 loaned to the charity.

“Investors can charge market rate interest, but it’s important to stress that they can’t get the capital back for three years. Individual investors can invest up to a total of £1,000,000 per tax year via multiple social enterprises and charities. Provided that the investment is held for at least three years, any capital gain arising on the disposal of the investment will be exempt from capital gains tax.  If an investor has a chargeable gain they can also defer this capital gains tax liability by investing it in a social enterprise or charity. Tax will instead be payable when the investment is sold or redeemed which provides scope for capital gains tax planning.

“When combined, these tax reliefs can make for an attractive investment from a tax perspective and they could be extremely useful to those charities and social enterprises who have revenue generating activities as it is will stimulate additional investment opportunities from a wider pool of investors.”

If you are a charity, social enterprise or possible investor, you can contact Inspired Accountants for further information on SITR by phoning 01543 624 600 or by sending an email to info@inspiredaccountants.com.