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Firms Call For Higher UK Social Investment Tax Relief

by Robert Lee,, London

16 November 2015

UK Enterprise Investment Scheme (EIS) managers are interested in developing products that would qualify for Social Investment Tax Relief (SITR) but regard the existing qualifying limit as a barrier to growth, according to a survey by investment analysts Intelligent Partnership.

Intelligent Partnership surveyed 22 EIS managers, and found that 32 percent are already developing SITR products or anticipate doing so pending approval of a higher investment limit by the UK Government. It said that a majority stated that they would be very unlikely to make an SITR-qualifying investment at the current GBP250,000 (USD380,120) limit.

Daniel Kiernan, Intelligent Partnership's Research Director, explained: "This is the single most important change that could be made in order to encourage the development of SITR retail investment products among this group of managers." However, according to Kiernan, the Treasury has suggested that this change is at least a year away, and it is unlikely that the Government will secure state aid approval from the European Union for a higher SITR limit within the next six to 12 months.

When a qualifying investment is made in a social enterprize, the SITR can provide a reduction of 30 percent of that investment on the investor's income tax bill for that year. The investor can also defer a capital gains tax (CGT) charge if they reinvest the profits into a social enterprize, and, after three years, sell or give away SITR-qualifying investments that have gained in value without paying CGT. The Government has proposed the introduction of a Social Venture Capital Trust (SVCT), to increase participation in social investment among retail investors.

TAGS: capital gains tax (CGT) | tax | investment | business | accounting | United Kingdom | fees | ministry of finance | tax authority | HM Revenue and Customs (HMRC) | retail | trade association | HM Revenue and Customs (HMRC) | trade | alternative investment | European Union (EU) | Investment | Europe | Invest | Investment

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