Breakthrough for social investment

At EQ, we’ve been keen proponents of social investment tax relief (SITR) since its inception. Tax break limits for social investment will expand fivefold this April, a significant boost to the market.

FacebooktwitterlinkedinmailFacebooktwitterlinkedinmail   by Jeannie Boyle, 13th March 2017

The UK Social Investment market is now the most advanced in the world with Big Society Capital suggesting the market is now worth in excess of £1.5 billion. Increasing the qualifying investment limit to £1.5 million from April will allow social enterprises to raise more investment through SITR, making it attractive to a wider range of enterprises and investors.

How does it work?

SITR was introduced in April 2014 and allows individual investors 30% tax relief on loans or equity investment made into social enterprises and charities.

Most SITR investments are likely to be made in the form of loans bearing a fixed rate of interest. This interest will usually be distributed to investors, net of 20% tax and will constitute taxable income.

What type of investments are being made?

Over 3,000 charities and social enterprises now utilise social investment opportunities. Employment, training and education have emerged as the most common areas for investment.

One such example is the Freedom Bakery, which was set-up in 2015 to provide employment opportunities for ex-offenders in Scotland and lower the re-offending rate.

Who is investing?

The main take-up has been sophisticated or high net worth investors. Since the loans are unsecured and relatively high risk, investors should expect there to be some defaults and so a diversified portfolio is essential.

If you’re driven by investing in ways that support your beliefs and make a difference, then it could be for you. As we’ve seen with the EQ Positive Impact Portfolios, impact investing is on the rise.


Jeannie Boyle
Director & Chartered Financial Planner, EQ Investors

» If you have any questions about the above, please do not hesitate to contact us.

Contact Jeannie

    Jeannie Boyle

    Jeannie is a Chartered Financial Planner, a Fellow of the Personal Finance Society and in 2015 won Money Management’s Ethical Financial Planner of the Year Award. She appears regularly in national and trade media outlets discussing personal finance issues.

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