Community investment tax relief to be retained

Osborne keeps the relief, despite a recommendation to scrap it from the Office of Tax Simplification

Office of Tax Simplification
Office of Tax Simplification

The government will keep community investment tax relief despite a recommendation that it should be scrapped.

Last month, the Office of Tax Simplification said the relief, which allows investors in community development finance institutions to reclaim up to 25 per cent of their investment over five years, should be dropped because take-up was low.

But in his Budget speech today, George Osborne, the Chancellor of the Exchequer, said CITR would be kept. He said the Budget abolished 43 complex tax reliefs because of recommendations from the OTS. 

"I have decided not to follow their advice to abolish the community investment tax relief, and instead I encourage people to take it up," he told parliament.

Bernie Morgan, chief executive of the Community Development Finance Association, the membership body for community development finance institutions, said CITR had become "a critical part of our members’ business plans".

Morgan added: "There has been a whole range of issues in making it more workable, and I think the Chancellor’s statement is a clear sign that he wants to make it easier to use. 

"It has raised about £70m since 2003, but this has been under quite difficult circumstances, so we could see this double or triple over the next two or three years."

She said she hoped Osborne’s statement about increased take-up would herald a government drive to make it easier to use.

Ralph Michell, head of policy at the chief executives body Acevo, said he was also pleased at the news.

"It would have been a bad signal to send, a few weeks after producing a social investment strategy, to abolish the main social investment tax relief," he said. "It doesn’t bring in a huge amount of extra investment, but in the current climate it’s important."

See round-up of 2011 Budget stories

Andy Ricketts recommends

Office of Tax Simplification

Read more

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus