Social Investment Tax Relief (SITR): Two years on

Social Investment Tax Relief (SITR) is a tax break introduced two years ago to help social enterprises and charities raise finance from individual investors. This paper, written in partnership with Big Society Capital (BSC), provides a review of the use of SITR to date. It includes an analysis of the SITR deals completed to date and the views of key stakeholders in this area.

We estimate that £3.4m has been invested across 30 organisations to date in SITR deals—these include both direct investments in enterprises and investments through SITR funds. The amount of capital raised in an average deal is just over £100,000 and the average cost of capital is 4.8% pa over a five year period. About 80% of deals to date have been loans, with the rest community shares or social impact bonds (SIBs).

It is still early days for SITR, but progress is ahead of Treasury forecasts and Big Society Capital is aware of another 40 deals on the horizon. Future support should focus on the barriers we found: that some organisations do not have the expertise required to either develop appropriate business plans or prepare financial documents; and that they do not know how to find investors.

• Take a look at BSC’s GET SITR campaign for free support to help organisations use SITR.
• For more information about our work on social investment, contact Abi Rotheroe via Abigail.Rotheroe@thinkNPC.org.