When it comes to savings and investments, some people might be very familiar with tax reliefs in the form of an ISA allowance, Seed Enterprise Investment Scheme or Social Investment Tax Relief, yet most people probably won’t have heard of Community Investment Tax Relief (CITR).
This is a missed opportunity as CITR eligible investments can provide very attractive tax reliefs - offsetting an individual or company’s tax bill by 25% of the value of the investment over a 5-year period.
CITR investment opportunities can only be offered via accredited Community Development Finance Institutions (CDFIs). CDFIs are social enterprises that provide debt finance and business support to underserved communities that are unable to access finance from mainstream sources. The CDFIs prioritise lending to businesses to create employment and safeguard jobs – meaning the on the ground social impact that these kind of investments opportunities deliver to marginalised communities can be truly transformational.
How CITR works in detail
i) Calculating the tax relief
Depending on an investor’s tax situation CITR equates to an annual return of: