United Kingdom


  • Service: Tax
  • Type: Press release
  • Date: 02/04/2014

“Social Investment Tax Relief” comes in on Sunday April 6th 

  • Likely to appeal to “community minded philanthropic investors”, says KPMG



On the 6th April a new tax relief will come into existence aimed at assisting social enterprises to raise funds which is likely to appeal to community minded philanthropic investors and could provide a fillip to local social enterprises, according to KPMG in the UK.


The relief will allow investors to claim 30 percent tax relief when they invest into any new shares or debt instruments in a qualifying enterprise, and allow them to defer any capital gains tax on gains which are subsequently reinvested into social enterprises. In addition, if the investment has been held for three years then any gains made will be free from Capital Gains Tax. Initially investors will be able to invest up to £1,000,000 a year into Social Enterprises and obtain these reliefs.


Dermot Callinan, Head of Private Client at KPMG in the UK, said:  “This is a valuable relief.  It allows a taxpayer to offset 30 percent of the amount they invest in a qualifying enterprise against their tax bill for that year.  This means that if someone puts in £100,000, they can reduce their tax liability by £30,000.


“This tax relief is most likely to appeal to community minded philanthropic investors and could prove to be a welcome fillip for local social enterprises.  The types of ‘social enterprises’ which will qualify are quite narrowly defined: they have to be carrying on some kind of trade and they can’t be too large (fewer than 500 employees and gross assets of less than £15 million).  But such ventures as community farmshops, theatre and arts shows, plus sports clubs, youth groups or educational establishments where there is a charge levied are likely to qualify.”



What is a Social Enterprise?


A social enterprise is defined as a community interest company, a community benefit society or a charity. It must be unquoted and have fewer than 500 employees and must have no more than £15 million in gross assets. The money raised by the social enterprise must be used within 28 months of the date of subscription for the purposes of its qualifying trade. The social enterprise can carry on most trades although there are some exclusions which are broadly in line with the enterprise investment scheme legislation.


The kinds of enterprises that might qualify could be the likes of a community shop benefiting a social enterprise such as a city farm.  A youth club or sports association could potentially qualify as long as it was carrying out some sort of trade.  This could be members’ subscriptions or a fee to attend.  Community theatre groups could potentially also qualify.  Larger, nationwide enterprises may find that they are over the limits on the number of employees (500) and gross assets (£15 million).


The following are examples of some existing social enterprises:


  • The Big Issue – which allows homeless individuals to purchase a magazine at cost price and then sell them onto the public at a profit.


  • Divine Chocolate – which allows Cocoa growers to get a fair price for their product. The company was originally set-up by the Body Shop and Comic Relief.


  • Jamie Oliver’s ‘Fifteen’ Restaurant – The restaurant takes on trainees from disadvantaged backgrounds and trains them into qualified chefs allowing them to build a career for themselves.


Who Qualifies?


An investor will be able to qualify for the relief if they have invested in qualifying shares and debt instruments which do not give them more than a 30 percent interest in the social enterprise. They will also not be able to be connected to the social investment prior to making the investment, which means for example they could not be an existing employee, director or trustee.


Who might this be of interest to?


This relief will potentially be of interest to people as an alternative to gift aid as it will attract a similar rate of income tax relief but also allows them take a bit more of an interest in the social enterprise – for example as a shareholder. It may also be of interest to people who wish to run a social enterprise on a commercial basis. The tax reliefs available to investors should make it easier for social enterprises to raise funds, particularly given the upfront tax relief and the potential to have the money returned to them at some stage in the future.



More information on the Social Investment Tax Relief (SITR) (PDF 60.33 KB).




For further information please contact:


Margot Cowhig, KPMG Corporate Communications

Tel:  0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk


KPMG Press Office: 0207 694 8773


Notes to editors.


KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.



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