Types of investment and amount that can be raised using SITR
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How much can I raise?
Due to State Aid conditions, there is a cap on how much you can raise using Social Investment Tax Relief (SITR).
The total amount an organisation can raise is £1.5m over its lifetime. However, there is a cap of £290,000 within a three-year period for organisations more than 7 years old.
Using more than one relief
Organisations can generally raise investment using more than one relief but it cannot offer investors more than one relief on the same investment.
This means that if an organisation needs to raise above the cap allowed using SITR, they can use another tax relief on the remaining amount they are raising as long as they are eligible.
Bear in mind that State Aid rules may still impact how much in total that you can raise using more than one tax relief and/or in combination with grant funding for the same investment opportunity.
Tax reliefs at a glance
There are six tax reliefs that organisations could potentially use to raise money to support their plans. In addition to SITR, they include the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Community Investment Tax Relief (CITR), Innovative Finance ISA (IFISA) and Gift Aid. See more below.
For further information on each including a more detailed comparison table, see our simple guide.
SITR investment can be in the form of an unsecured loan, equity or a Social Impact Bond (SIB).
Investors lend you money, which you agree to pay over a set period of time. Most loan investments are paid back with interest. SITR enables you to negotiate the terms of the investment including the interest rate. As with all types of SITR investment, there is a window of three years and one day before repayments start on the capital borrowed.
Investors with equity have a share of the organisation. SITR can be used to raise equity investment in the form of community shares. Only organisations with certain legal structures such as a Community Benefit Society or a Community Interest Company limited by shares can offer equity with SITR. Investors with equity are not able to withdraw their shares for a minimum of three years and one day.
ASocial Impact Bond(SIB) is a payment-by-results contract between an organisation to deliver a service, the commissioner (for instance, a local authority) and the investors. Organisations must be an accredited Social Impact Contractor to deliver a SIB.
Investment using SITR can be raised from:
A direct deal with individual investors
As with other types of SITR investment, there is a window of three years and one day before repayments start.