The 2014 Finance Act introduced a new tax relief for those wanting to invest in social enterprises.
Income tax relief is available at 30% of the amount invested (up to a maximum of £1 million) to UK resident individuals who subscribe for qualifying shares, or qualifying debt investments, in an enterprise which meets the SITR requirements.
The investment must be held for a minimum of three years from the date of the investment for the relief to be retained. If it is disposed of, or the qualifying conditions cease to be met, relief is withdrawn or reduced.
Capital gains holdover relief is available where the gain from the disposal of any kind of asset is reinvested in shares or debt instruments, which also qualify for SITR income tax relief. It is not necessary for the investor to have made a claim for SITR Income Tax Relief. The gain must arise in the period between 6 April 2014 and 5 April 2019. The SITR qualifying investment must be made in the period one year before or three years after the gain arose.
If an individual has received income tax relief on the cost of the investment and the investment is disposed after the three year holding period, then any gain on disposal is free from Capital Gains Tax.
The qualifying conditions attaching to the investee company are similar to those attaching to investee companies under EIS, SEIS and Community Investment Tax Relief.
For more information, please contact Mark Hart or your usual Blick Rothenberg contact.