We often get asked what the differences are between the various tax reliefs available to charities and social enterprises. This is why, together with Bates Wells, we are pleased to publish A Simple Guide to Tax Reliefs. As well as covering the relatively new Social Investment Tax Relief (SITR), it also covers SEIS, EIS, CITR, IFISAs and Gift Aid.
As a simple soul, whose number one interest in working with social enterprises and charities is in creating impact, anything that is too finance-y or uses legalese sends me running for the hills. But the longer I work in the social investment world, the more I realise it doesn’t need to be that complicated.
Statements such as “that is a regulated activity, you need to make sure that you aren’t making a financial promotion” immediately puts us social entrepreneurs on edge! Why? Because it sounds expensive to find out what that means in practical terms. What we really want to understand is: when do I need to pay for the services of a professional?
Introducing simple guides
So last year, as part of GET SITR, we were delighted to collaborate with Bates Wells to publish the first of our Simple Guides. In this case, to financial promotions. And I can promise that it does exactly what it says on the tin. In a simple case of first-hand user testing, I use myself as the benchmark. I have no financial, accountancy, tax or any other professional service experience, but I have run a social enterprise for five years and sold ladies fashion for many more than that! The guide is straightforward and clear: if I can understand it then I believe it passes the simple test.
Social Investment Tax Relief
GET SITR is a campaign to raise awareness specifically about Social Investment Tax Relief (SITR), a way that individuals can invest into eligible social enterprises and get 30% back from the tax man. Sounds good? That’s why you should know what it is! It only takes a two minute video and a whole lot of bread (yes, really) to find out more.
So after the “what is it question”, one of the most frequently asked is: what about the other tax reliefs like EIS, SEIS and CITR? (As you can see a whole lot of acronyms going on here.)
Frequently Asked Questions
Questions we are regularly asked include:
- Can I use two different tax reliefs as part of the same deal?
- Which tax relief is better or most suitable for the type of investment I am trying to achieve?
- Can organisations as well as individuals benefit from using a tax relief?
It was definitely time for another simple guide!
A simple guide to tax reliefs
As our next ‘Simple Guide’, we are very pleased to be publishing A Simple Guide to Tax Reliefs for Charities and Social Enterprises, which answers these questions and more. Oliver Hunt, Charity and Social Enterprise specialist at Bates Wells who wrote the guide said,
There are many potential tax reliefs for investing into charities and social enterprises, but the rules can be complex and difficult to put into practice. I was delighted that Big Society Capital asked Bates Wells to write this briefing and hope it gives charities and social enterprises the confidence to explore the potential of these reliefs.
It is so frustrating that tools like tax reliefs are so complex - we can’t all be lawyers or tax experts! The role of GET SITR is to help translate the opportunities that tax reliefs can play. Hopefully this guide will help to bring us one step nearer to supporting investment into social enterprises and charities (or donations in the case of gift aid). If the way ahead is just a little simpler, it will be a job well done.
Here's a quick glance at all six reliefs:
For further information on each including a more detailed comparison table, see: A simple guide to tax reliefs for charities and social enterprises.
About Bates Wells
Bates Wells have one of the largest dedicated charity and social enterprise legal teams in the UK. Their clients range from household-name charities to innovative start-ups and from international organisations to local community groups.
As part of our a wider involvement in the charity and social enterprise sector, Bates Wells have developed and driven through new legal forms and act extensively on charity law, social enterprise and advising on leading social investment transactions and innovations.