Budget 2014: Social Impact Investment


Social Impact Investments: Budget 2014

This is a guest blog from Gavin Francis of Worthstone. If you follow my blog, you will be aware that Worthstone are voice piece for the social investment world here in the UK, providing advisers like me with valuable insight into this “new” sector, access to research and tools for the job.

Improved tax relief now 30%

The Government has set the rate of income tax relief for the Social investment tax relief at 30%. That is the same as the rate for Enterprise Investment Scheme and Venture Capital Trust investments and creates a level playing field for investment.  Individuals making an eligible investment at any time from 6 April 2014 can deduct 30% of the value of that investment from their tax liability for the year in which the investment is made.

Unlike the other venture capital tax reliefs, SITR will be available for debt as well as equity investments, and for organisations with fewer than 500 employees. That will make it easier for social enterprises to access the relief and reflects the particular characteristics of the sector. These terms are unique to SITR.

The Government have also announced the maximum amount of tax-advantaged investment each organisation can receive. Eligible organisations will be able to receive up to €344,827 (around £290,000) over three years. The amount is expressed in Euros in order to maximise the amount organisations can receive without infringing EU rules for de minimis schemes, and is nearly double the limit proposed in the consultation paper last summer. The sterling equivalent to the maximum amount in Euros will be set by the spot exchange rate on the date of investment.

These decisions reflect the Government’s firm intention to grow the social investment and its recognition of the valuable role social enterprises play in growing and rebalancing the economy, reforming the public sector and promoting social justice. The relief itself will be introduced in Finance Bill 2014 to come into effect in April 2014. The link is here https://www.gov.uk/government/topical-events/budget-2014

Legislation and guidance

HMRC will publish interim guidance on the relief alongside the Finance Bill on 27 March. Full guidance will be available in the autumn.  HM Treasury have also been consulting (informally) on legislation to include social impact bonds within the scope of SITR. Due to the complexity involved, those pages of legislation and interim guidance on the accreditation scheme for companies issuing social impact bonds will be published a few weeks later. Individuals will still be able to claim tax relief for eligible investments in social impact bonds from 6 April 2014, as for other SITR investments.

Gavin Francis

Budget 2014: Social Impact Investment2023-12-01T12:39:03+00:00

What Is Impact Investing?

Many of the clients that I work with and the people I meet see money as a tool. I haven’t yet met anyone that really seems to think that the object of the exercise is to get as much as possible. How much is enough? is of course a very provocative question and is in reality one that needs the context of a person’s life. Charitable giving is an option many follow and increasingly there is an awareness and use of ethical or socially responsible investment. However, these have limitations. Social Impact investing offers another option. One that we can help clients consider carefully. It is not without its problems and risk (what investment isn’t?) but it is very much on our radar and on the rise as a form of financial planning. Here is a little video by Worthstone, a leading Impact Investment organisation headed by Gavin Francis. Do take a look.


What Is Impact Investing?2023-12-01T12:23:20+00:00
Go to Top