The Social Investment Tax Relief (SITR) scheme is a tax relief scheme to encourage individuals to support social enterprises and to assist social enterprises accessing new sources of finance. The scheme can be used for investments made on or after 6 April 2014.

Individuals making an eligible investment can deduct 30% of the cost of their investment from their Income Tax liability for 2014/15 (or the relevant later year in which the investment is made). The minimum period of investment is 3 years. Individuals can also defer their Capital Gains Tax (CGT) liability and benefit from capital gains disposal relief.

In order for investors to claim SITR, eligible social impact bond contractors will need to be accredited. New guidance together with an application form has been published that sets out the criteria by which the minister for the Cabinet Office makes decisions with respect to companies seeking accreditation as Social Impact Contractors. While the Cabinet Office manages the accreditation process, HMRC is responsible for administering the tax relief scheme.

A Social enterprise must be a community interest company, a community benefit society, with an asset lock or a charity. In addition, the social enterprise must have fewer than 500 full-time equivalent (FTE) employees, not more than £15 million in gross assets immediately before the investment and not more than £16 million in gross assets immediately after the investment. Individual investors can invest up to £1,000,000 and can invest in more than one social enterprise.