A group of more than 30 third sector investment bodies and organisations have called on the government to extend access to social investment tax relief beyond April next year, warning that a failure to do so could lead to the loss of hundreds of jobs in community services.
SITR, which was introduced in 2014, offers a 30 per cent tax break for investors who fund charities and social enterprises that meet certain criteria, such as having assets of less than £15m.
But the measure is due to come to an end in April 2021 unless the Finance Bill passing through parliament is amended, warns a letter to the Treasury from the social investment wholesaler Big Society Capital and 32 other social finance bodies and organisations.
The Finance Bill, which is due to be debated on Tuesday, is at the committee stage in the House of Commons.
But demand for the scheme has been substantially less than the government originally expected, and last year it called for evidence to help it decide whether to continue offering the relief.
Stephen Muers, interim chief executive at Big Society Capital, said: “Now is not the time to be taking away a tax-relief scheme that has been proven to attract significant investment into some of the most disadvantaged places and causes in the UK.
“This is why we urge MPs to act quickly to prevent the closure of what is a valuable lifeline for the sector, saving potentially hundreds of jobs and key community services in the process.
“The Conservative government introduced the relief in 2014 and, because of the election in December 2019 and the sudden onset of the pandemic, has not been able to complete a review of its impact, which means it could come to an end in April 2021 without timely intervention.
“What we are proposing is a modest two-year extension to allow time to reflect and make any necessary changes needed to support future policy on directing private money to disadvantaged places and causes.”
Wes Streeting, the shadow exchequer secretary to the Treasury, said scrapping SITR “would come at a time when the third sector is already taking an enormous financial hit as a result of Covid-19”.
He said: “The government has to commit to protecting SITR by extending it to April 2023 so that social investment firms can keep raising and deploying capital into social enterprises.
“Allowing it to close without an alternative would send the wrong message to the voluntary sector and undermine the government’s claim about their levelling up agenda.”
A Treasury spokesman told Third Sector: “Investors and social enterprises can still benefit from social investment tax relief until April 2021, when the relief is set to expire. Current and future qualifying investments made before this date are not affected.
“We’ll announce a decision on the future of the relief later this year.”