In four weeks' time, the UK Government will announce the fate of Social Investment Tax Relief (SITR). The announcement at the Spring Budget will confirm whether the Government is committed to supporting the Levelling Up agenda and ready to make good on seeing community services thrive.
The tax relief, which raises affordable and patient capital for social enterprises and charities, is at risk of being retired because of a sunset clause in the legislation that created it. I propose a simple solution: to extend the sunset clause for a further five years. We agree that the tax system as it stands is incredibly complex, so we understand the Treasury's wish to simplify it. However, sacrificing the ability of social enterprises and charities to access this investment which is #NeverMoreNeeded to ensure we can #BuildBackBetter seems unfathomable.
It is estimated that as a direct effect of the pandemic in 2020, households saved over £120 billion, an increase of £82 billion kicking around in savings and current accounts in comparison to 2019. SITR provides one option for those who have more to invest into their own community or other communities of benefit to see the impact their investment can make on people’s lives.
SITR is not perfect, so alongside saving SITR we want to work with the Government to improve it (or even replace it with something better). However, choosing to scrap it in the middle of an economic crisis without an alternative does not deliver on the Government’s promises to support the UK’s social sector.
That is why at Big Society Capital, along with our partners including Social Enterprise UK, Resonance and Co-operatives UK, we are fighting to retain and develop SITR with urgency - on behalf of the brilliant organisations who have already raised £15 million using the tax relief, as well as those who are yet to use it.
Never more needed
If the COVID-19 crisis has demonstrated one thing, it is that our voluntary and community sector has never been more needed. Charities, social enterprises and community businesses providing vital services sit at the heart of our recovery. Yet for many, the future looks uncertain.
SITR is unique because it is the only tax relief that incentivises private investment into social enterprises and charities, and allows investment in both shares and loans. As communities recover from the catastrophic impact of last year, what is needed is flourishing spaces for people to use and enjoy. Without SITR, we know that many lifeline community hubs would not exist today. There will be community pubs, shops, and sports clubs that now just may not be able to raise the capital they need.
After an intense and challenging period of investment raising, pioneering social enterprise, The Skill Mill, was last year able to use SITR as part of a £1 million investment package to help rehabilitate 224 young people. The Skill Mill works with young people to break the cycle of re-offending, and is the first organisation in the North East of England to have utilised SITR investment. Yet just as the tax relief is having an impact, it is at risk of being taken away.
Levelling Up
SITR has huge benefits for social enterprises and charities in regions outside of London. With 90% of investments taking place outside of the capital, extending the tax relief is a simple way for the Government to support its own Levelling Up agenda.
It is often in remote and rural areas where SITR investment flows, channeling capital into vital community anchors, such as pubs, sports clubs and shops.
Amberley Shop on the Common in Stroud is a wonderful example of a community-owned enterprise that has utilised SITR. By offering shares to local people in their local shop, with 30% tax relief, it encouraged more investment to develop their shop, cafe and post office. In a rural area, it is set to become so much more than a shop, but a place for neighbours and the community to come together.
With SITR, the future looks brighter
Saving Social Investment Tax Relief is the first step, but we need to go much further.
If SITR is saved, Big Society Capital along with our partners have high hopes for reform. The take-up of the tax relief has been disappointing in comparison to early estimates, but that does not mean it is not valuable. With some changes, we believe that a reformed SITR could be transformational, with services directly benefiting a huge range of communities. We have also gathered evidence which demonstrates that SITR has the potential to be utilised effectively by care homes, community energy organisations and community spaces.
Social Enterprise UK estimates that saving and expanding SITR would create 13,500 more jobs and help 4,000 social enterprises over the next five years. Replacing it without an effective alternative would be a clear message to social enterprises, charities and communities that our business models are not seen as economically comparable to the for-profit organisations that benefit from their own tax schemes such as EIS and SEIS.
So, the ask to Rishi Sunak, Chancellor of the Exchequer, is simple. We will be watching and waiting with bated breath for the Spring Budget announcement.
Join the #SAVESITR campaign:
You can take action to support the continued flow of vital investment into social enterprises, charities and community businesses across the UK.
Join #SAVESITR campaign:
- Write to your MP - search for your MP and find their email address and use our template MP email.
- Support on social media with #SAVESITR - tag in @RishiSunak @Jesse_Norman and find your MP Twitter Tag.
- We have launched our #SAVESITR video campaign, make sure to follow the hashtag and share.
Rishi Sunak MP will announce a decision on SITR’s future in the next budget on 3 March 2021. To date we have seen £14.5 million raised through SITR. More information about social enterprises and charities who have utilised the tax relief.
Get in touch:
If you would like more information about how you can help or if you need support, please contact: Mel Mills, Senior Director Social Sector Engagement by email: mmills@bigsocietycapital.com
For more information and resources on Social Investment Tax Relief, please visit: www.getsitr.org.uk
