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SOCIAL INVESTMENT TAX RELIEF (SITR) WHAT IT IS AND HOW IT WORKS
Bringing Impact to investment
Who are ClearlySo?
ClearlySo is a leading financial intermediary in the UK social impact investment space
The UK is a leading social impact investment market, with the sector contributing £24bn to the UK economy each year, and with over 70,000 regulated companies operating within the sector in the UK. Investors are increasingly looking to invest their money in extraordinary businesses that create positive social change.
ClearlySo provides advisory and introductory services to businesses and funds looking to raise capital in excess of £200,000, with our clients raising over £70m as of Nov 2015. We raise capital and conduct corporate advisory work across a range of sectors, including health, housing, environment and social care.
SITR - BENEFITS
• Unlock large amount of new capital
• Help identify new investors/partners with connection to social issue
• Better investment terms? Tax relief may enable lower required risk-adjusted interest rates (no minimum rate of return)
• More appropriate products available – simple debt products, per Charities Finance Group: “We’re pleased that the social investment tax relief will apply to simple unsecured loans”
• Other more sophisticated products (such as combinations of mortgages and unsecured debt) may also be helped
Charities and social enterprises Investors
• Provides an opportunity to increase support charities they already know and connect with
• Product has ‘look and feel’ of EIS, and many EIS products now discontinued (because of ROCs)
• Access to new products (debt products available in SITR but not under EIS)
• Up-front income tax relief (30%)
• New sectors (such as health and social care)
• Diversified returns?
SITR - ELIGIBILITY
No. Question The investee organisation is eligible if it:1 Legal Status Is a registered charity, IPS Community Benefit Society or Community Interest
Company? AND2 Size Has less than 500 employees AND
Less than £15m assets AND3 Activities Not undertake any excluded activities, being: electricity generation, property
development solely or primarily to make capital gains, personal lending
No. Question The investment is eligible if:4 Type It is either of:
- Shares OR- Debt that is:
o Not secured by any assets ANDo Does not repay the principal in first 3 years ANDo Is not preferred to any other investment instruments on wind-up AND
5 Size The tax relieved amount is no more than £290,000 (approximate calculation) AND6 Other relief It has not received tax relief already (through EIS or VCT) on the same investment
No. Question The investor is eligible if:7 Investor It is an individual paying tax in the UK AND8 Structure The investor invests either:
- Directly OR- Through a nominee fund
A deal is eligible for SITR by asking eight separate questions:
Investee organisation
Investor
Investment Current consultation
on size
Current consultation on indirect
investments
SITR - HIGHLIGHTS
Maximum individual investment
Income Tax Relief Maximum investment per investee
SITR – COMPARED WITH OTHER TAX RELIEFS
SITR- IN MORE DETAIL
SITR IN PRACTICE
