Tax relief for social enterprises across the UK will be extended until April 2023, the government announced today in the Spring Budget.
Chancellor Rishi Sunak said he would continue to support social enterprises that were seeking investment growth by extending the tax break, which was due to end next month, for an additional two years.
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.
The availability of income tax relief and capital gains tax hold-over relief for investors in qualifying social enterprises will also continue, helping them to access patient capital, according to the government’s full Budget policy document.
This measure will be legislated for in the government’s Finance Bill 2021, and a summary of responses to the consultation it held in spring 2019 will be published on 23 March.
A group of more than 30 third sector investment bodies and organisations have been lobbying the government to extend access to SITR since June last year.
Peter Holbrook, chief executive of Social Enterprise UK, said the decision needed to be the start of a dialogue about how a supportive tax environment could be created to enable social enterprises to thrive.
“The level of tax support that social enterprises receive compared to other sectors of the economy is not equal and SITR does not solve all the problems social enterprises face,” he said.
“We urgently need to redesign our tax system to recognise social, economic and environmental impact. Keeping SITR must not be the end to this work, but the beginning.”
Melanie Mills, senior director of social sector engagement at Big Society Capital, said: “Today’s promise will enable vital patient and affordable capital to continue to be unlocked for social enterprises, charities and community businesses, allowing them to build back better and fairer.
“Saving SITR is just the first step towards unlocking more private investors' capital to support social enterprises and charities.”