The government has proposed a number of changes to a planned tax relief for social investment, which is expected to be introduced in the Finance Bill 2014.
The relief will be based on the existing enterprise investment scheme, and will allow investors putting money into regulated social organisations, including charities, to claim back part of their investment against their tax bill. A consultation on the terms of the relief took place earlier this year.
A summary of responses to the consultation, jointly published yesterday by the Treasury and the Department for Business, Innovation and Skills, says the government plans to raise the amount of investment that investors can claim relief on.
It had originally proposed that the relief would only apply to £150,000 over three years, in order to comply with de minimis limits for state aid approval from the European Union, but charities and investors said this level was too low to be practical.
The summary of responses also says that unsecured loans will be included in the relief, in addition to the previously proposed types of investment.
The relief was originally aimed at investments in charities, community interest companies and community benefit societies, but the summary says that the government will set up a registration scheme for social impact bonds, and that investment in registered SIBs would also qualify.
The summary also says the government will allow organisations with 500 or fewer employees, as opposed to the originally proposed limit of 250, to take advantage of the relief.
Jane Tully, head of policy at the Charity Finance Group, said: "The terms of the relief reflect a number of points we stressed in our consultation response in order to make the relief work for the charity sector.
"It’s positive that it will apply to simple unsecured investments. This is the most suitable form of investment for many charities and is likely to experience the greatest shortage in coming years.
"Overall it’s a step in the right direction, but there’s still much work to be done. The real test will be whether the appetite is there from charities and investors to avail themselves of the relief."