The Social Investment Tax Relief (SITR) scheme was set up by the UK Government to encourage individual investors to support social impact enterprises.
How much tax relief can I get?
1. Tax reliefs when you invest
30% Income Tax Relief: so let’s say, for a £10,000 investment, your income tax is reduced by £3,000 that year
Capital Gains Deferral Relief: you can defer any Capital Gains Tax (CGT) you might have to pay if you reinvest those profits into SITR-eligible enterprises
2. Tax reliefs when you exit your investment
100% Capital Gains Tax Exemptions: all your profits from selling your SITR investments are exempt from Capital Gains Tax. You will have to pay Dividend Tax on dividends (or Income Tax if they’re bonds) from these investments
100% Loss Relief (except for SITR loans): if you have losses from your SITR investments, you can set them against your Income or Capital Gains Tax
3. Additional reliefs
100% Inheritance Tax Relief: the inherited shares and bonds get full IHT relief you pass away after 2 years
The maximum amount you can invest is £1,000,000.
How do I claim the SITR tax relief?
Keep in mind that you’re only eligible for the CGT exemption and the Income Tax relief if you keep the investments (either shares or bonds) for 3 years.