Tax reliefs have annual limits
A minority stake in your business
Social enterprises (i.e. community interest companies, registered charities and community benefit societies) who meet the eligibility criteria
Social investment tax relief (SITR) is a government scheme that incentivises private investment in social enterprises (i.e. businesses that generate a positive social impact). The rules for both investor and social enterprise are similar to those for Enterprise Investment Scheme (EIS).
The government introduced Social investment tax relief (SITR) in 2014. At the time, private individuals investing risk capital into early-stage mainstream businesses were already benefiting from the EIS and SEIS schemes, so SITR was seen as a way of levelling the playing field for social enterprises. The government defines social enterprises for SITR purposes as:
• community interest companies
• registered charities
• community benefit societies
1. Complete and submit a compliance statement to HMRC
a. You need to submit a form to HMRC each time a new investment is made
2. Receive confirmation investment is SITR eligible from HMRC
3. Complete certificates and share with investors
4. Investors can now make a claim back from the HMRC for tax relief
In line with the eligibility rules for EIS, your business might be eligible for a SITR investment (along with advice and support) if:
• you will use money for a ‘qualifying trade’
• you have no more than £15m in gross assets
• you have no more than 250 employees
The maximum amount of investment allowed the lifetime of your enterprise is £1.5m. Any investments under SITR will also count towards limits on further investments through government venture capital schemes (i.e. EIS, SEIS and VCT).
The tax reliefs for individual investors are similar to those available via the Enterprise Investment Scheme (EIS) and include income tax relief (30% of the value of the investment up to £1m total investment per tax year.
You can find more information on the HMRC website under SITR.
Enterprise Investment Scheme (EIS) – The Enterprise Investment Scheme (EIS) is a government tax-relief scheme that incentivises private individuals to invest in early-stage businesses. EIS allows an individual to invest up to £1m per tax year and get a 30% tax break. Any single business can raise up to £12m in EIS funding in its lifetime.
Seed Enterprise Investment Scheme – is a government tax-relief scheme that incentivises private individuals to invest in very early-stage (i.e. seed) businesses. This scheme allows any individual to invest up to £100,000 every tax year and receive a 50% tax break. Any business can raise a maximum of £150,000 in SEIS funding in its lifetime.
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