SITR for charities & social enterprises | Social Investment Tax Relief

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

In a short video, Julius shares how Second Shot Coffee is tackling homelessness with the help of coffee and SITR.

Watch Second Shot Coffee's story

What type of capital can SITR raise?

Unsecured

loan or equity

Flexible

Negotiate terms acceptable with your investors

Patient

Window of 3 years and 1 day before repayments start on the capital borrowed

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

Find out if you can use 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)

More on investment types

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

Help with Advance Assurance

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.

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