The SITR Funds have the following target returns:
7-8% post tax relief IRR
Based on 30% income tax relief arising from investments made over a two-year period, and an assumed average interest rate of c.3% during years one to three and c.5% during years four to six, with capital repayment between years four to six. Post tax IRR is defined as including the 30% income tax relief from SITR but excluding other potential tax effects, such as income tax on interest payments and capital gains tax relief on any losses, which will vary according to the specific tax status of each investor. As an indication, on this basis the Post tax IRR is forecast at 8.5%, and taking into account these other potential tax effects would result in a forecast IRR of 7.8% for a standard rate tax payer and 7.1% for a higher rate tax payer.
12% Gross Equivalent pre-tax return
The Gross Equivalent return is calculated by dividing the net post-tax target return of 7.1% by 0.6 for a 40% tax payer.