I would like to learn about:

Social Investment Tax Relief (SITR) can be used by eligible social enterprises, charities & community businesses to raise new investment to support your trading services.  It could provide routes to investment which offer better value and could potentially be less costly than other sources of investment.

"SITR for us has been incredible. I don't know that Second Shot would have been able to get off the ground without it."

Julius Ibrahim, Founder, Second Shot Coffee

What type of capital can SITR raise?
Unsecured
Unsecured
loan or equity
Negotiate terms
Flexible
Negotiate terms acceptable with your investors
Calendar
Patient
Window of 3 years and 1 day before repayments start on the capital borrowed
Umbrella
Risk is offset
Cost of finance subsidised with a 30% tax relief for investors
How does SITR work?

The step-by-step process for using Social Investment Tax Relief to raise investment for your organisation.

Before raising SITR investment
1. Eligibility
  • Only organisations with certain legal structures are eligible
  • Some trading activities don't qualify for SITR
2. Investor research

Possible investment sources

  • SITR fund
  • Crowdfunding / Community shares
  • Individual investors (minimum 4 or with no more than 30% of the debt)

Investment size, type & terms

  • Amount of debt or equity
  • Term of investment: duration and interest
3. Apply for Advance Assurance with HMRC
  • Not compulsory but it is highly advisable
  • The process currently takes between six and 14 weeks for a response so do make sure you build it into your timetable
4. Investment preparation
  • Secure investor source(s)
  • Complete legal documentation (investment proposal and loan agreement)
  • Agree date for transfer of funds with investors
  • Agree date for commencement of loan contract

You can find example loan agreements under the relevant type of SITR investment.

After raising SITR investment
5. Investment

Ensure that all money has been transferred in advance of start date of the loan contract to ensure no investor holds more than 30% of the debt

6. SITR compliance

Compliance statement

  • This is a form setting out the details of the investment and the investors, which you can access from HMRC's website
  • It needs to be submitted to HMRC each time a new investment is made
  • Earliest date for submission: trading activity funded through SITR must have begun and been sustained for at least 4 months
  • Latest date for submission: no later than 2 years after the end of the tax year in which the investment was made

Certificate

  • Must be issued to each investor so that they may claim the relief
7. Repayment of debt
  • Minimum of 3 years and 1 day capital holiday
  • If applicable, interest can be paid throughout the loan period
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