Extension of the Social Investment Tax Relief for Venture Capital Schemes
Published 3 March 2021
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Who is likely to be affected
Social enterprises, individuals who invest in social enterprises, Social Investment Tax Relief (SITR) fund managers.
General description of the measure
This measure extends the operation of the SITR from April 2021 to April 2023, continuing the availability of Income Tax relief and Capital Gains Tax (CGT) hold-over relief for investors in qualifying social enterprises.
A response document to the 2019 consultation ‘SITR: call for evidence’ will now be published.
Policy objective
The SITR intends to support social enterprises seeking external finance by providing tax incentives to encourage individuals to invest in them. The legislation contains sunset clauses for the Income Tax and CGT reliefs available which would bring the scheme to an end in April 2021. This measure extends those sunset clauses and the SITR to April 2023.
Background to the measure
At Budget 2018 the government announced that it would consult on the SITR to understand how the scheme has been used since its introduction in 2014, including levels of take up and the impact the scheme has had on social enterprises’ access to finance. A consultation document ‘SITR: call for evidence’ was published on 24 April 2019.
This evidence has been used to inform this decision about the future of the relief.
Detailed proposal
Operative date
The changes to this measure will apply to qualifying investments made on or after 6 April 2021.
Current law
The changes to this measure will apply to qualifying investments made on or after 6 April 2021.
Proposed revisions
Legislation will be introduced in Finance Bill 2021 to replace the existing dates within the sunset clauses of 6 April 2021 with the new end date of 6 April 2023.
Summary of impacts
Exchequer impact (£m)
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Nil | Nil | Nil |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure is not expected to impact on individuals. Individuals who wish to invest in social enterprises will not see any change to what they currently do now. There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that the extension of the scheme will change the impacts of this measure on any group. After careful consideration, and taking account of the data available, we have concluded that there are no impacts on groups of people sharing protected characteristics differently to other groups.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on an estimated 110 social enterprises by extending the operation of the SITR from April 2021 to April 2023 which continues the availability of Income Tax relief and CGT hold-over relief for investors in qualifying social enterprises. One-off costs will include familiarisation with the change. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as it does not alter how social enterprises interact with HMRC. This measure is not expected to impact on civil society organisations.
Operational impact (£m) (HMRC or other)
The costs to HMRC of implementing these changes are anticipated to be negligible.
Other impacts
Other impacts have been considered and none has been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Martin Trott on Telephone: 03000 585619 or email: venturecapitalschemes.policy@hmrc.gov.uk.