The relief will come to an end unless the Finance Bill, which is currently making its way through parliament, is amended.
SITR was introduced in 2014 as one way to attract private investment into the social enterprise sector and it is the only tax relief designed specifically for that sector. Private investors can loan money to small and medium sized charities and social enterprises, thus making funds available to organisations which otherwise might struggle to find lending from conventional lenders. Investors are rewarded with 30% tax relief in relation to the amount invested. Around £14 million has been made available to at least 75 such organisations, which is a lower take-up than the Government originally intended.
Social enterprises that benefit from SITR are often working in communities very much in need and budgets are usually tight. The withdrawal of this relief on top of the pressures arising from coronavirus (COVID-19) will be very hard to bear for those organisations and investors who currently benefit from the scheme. It also removes a potential funding source for others. A coalition of 33 social investment funders, including Big Society Capital, Triodos Bank and Charity Bank, has written to the Treasury to ask for, at the very least, a two-year extension to the scheme. A final decision will be made in the autumn.