There was some good news for supporters of social investment buried in the small print of the Chancellor’s Autumn Statement. The threshold for businesses raising finance through Social Investment Tax Relief (SITR) has been raised to £1.5 million, for companies up to seven years old. While some had hoped for a larger increase to £5 million, it is nevertheless welcome news, which should provide a boost for the sector.
Simon Rowell of Big Society Capital called it “a step forward” for SITR: “It will enable a range of younger, dynamic charities and social enterprises, as well as recent spin-outs, to use capital to boost their operations to reach more people and try new business models.”
Peter Holbrook, chief executive of Social Enterprise UK said the SITR increase “ought to make it easier for people to invest in social enterprises and help drive investment towards socially productive industries.”
The government has also tweaked the system to ensure the scheme is targeted better at helping raise risk capital for genuine social enterprises. Asset leasing and on-lending are being excluded, while investment in nursing homes and residential care homes will be excluded initially, however the government intends to introduce an accreditation system to allow such investment to qualify for SITR in the future. The limit on full-time equivalent employees will be reduced to 250.
The changes kick in at the start of the new tax year, April 7th 2017. The government also pledged to undertake a review of SITR within two years of its enlargement. No talk yet of whether it will be extended to community energy, which many of us would like to see.