Social Investment Tax Relief: When HMRC Accidentally Does Something Right

I don’t often have nice things to say about tax policy. Most of the time, the tax system treats CICs as an afterthought — if it treats us at all. So it’s worth noting when something actually works.

Social Investment Tax Relief was introduced in the Finance Act 2014. The principle is simple: individuals who invest in qualifying social enterprises get 30% income tax relief on their investment, up to £1 million in investments (recently raised from the original limit). Charities, community benefit societies, and CICs are all eligible.

Two years in, the evidence is clear. It’s working. Not perfectly, not at scale, but genuinely working. CICs represent about a quarter of all SITR deals by number. That means hundreds of CICs have accessed investment they wouldn’t otherwise have had, and hundreds of investors have received a tax incentive that made the decision easier.

The expansion this year — raising the investment limit to £1.5 million and extending the eligibility period to seven years from incorporation — is sensible. It acknowledges that social enterprises need longer to reach investment readiness than the original three-year window allowed. It also recognises that the £500,000 limit was too low to support meaningful capital raises.

I’ve been critical of the government’s approach to social enterprise policy for a long time. Too often, we get warm words and no action. SITR is the exception. It’s a policy that was designed in consultation with the sector, implemented without excessive bureaucracy, and refined based on evidence. It’s not perfect — the take-up could be higher, and awareness among both CICs and potential investors is still patchy. But it’s a genuine example of the tax system being used to support social purpose.

The risk now is that SITR gets forgotten. It’s not a headline-grabbing policy. It doesn’t have a champion in government. If HMRC decides it’s too much hassle to administer, or if the Treasury decides the relief is costing too much, it could be scaled back or abolished.

We need to defend it. SITR is one of the few policy tools that actually works for CICs. Losing it would be a genuine setback.