The Chancellor has added to the range of tax reliefs available for investors by announcing that Social Investment Tax Relief will be introduced in the Finance Bill 2014.
Social Investment Tax Relief is expected to closely mirror EIS by providing income tax relief of 30% on qualifying investments in social enterprises, deferral of CGT on the re-investment of chargeable gains and CGT exempt disposals of the relevant shares after three years. Under the scheme, eligible social enterprises (which should include charities, Community Interest Companies and Community Benefit Societies that meet specified conditions) can receive up to £290,000 of qualifying investments over the course of three years.
Through utilising the tax reliefs that have been so effective in encouraging investment into small companies and applying these to investment in social enterprises the Government has cleverly combined an area in need of funding with investors willing to provide it. The Government anticipates that this relief could raise up to £500 million for social enterprises over the next five years.
Draft guidance on the new relief will be published on 27 March 2014.