PT37 Social Investment Tax Relief

Question 1

SITR encourages individuals to …..
by offering …..

Answer 1

invest in ‘social enterprises’
a 30% income tax reducer.

Question 2

Who is eligible for SITR?

Answer 2

All individuals who pay tax in the UK

Question 3

SITR

Individuals cannot obtain relief if they are…..

Answer 3

an employee or (generally) a paid director of the social enterprise

OR

if the individual (together with their associates) owns more than 30% of the voting rights or loan capital.

Question 4

SITR

Immediately before the investment the individual cannot…

Unless…..

Answer 4

hold shares or debentures in the social enterprise

the acquisition qualified for income tax relief under the EIS/SEIS/SITR provisions or the shares were subscriber shares.

Question 5

Individuals must either…

Answer 5

subscribe for shares in the social enterprise or lend money to the social enterprise (in return for loan capital or debentures).

Question 6

What legal form must the social enterprise have?

Answer 6

The social enterprise must be a registered charity, a Community Benefit Society (‘BenCom’) or a Community Interest Company (CIC).

Question 7

What are BenComs & CICs?

Answer 7

Corporate bodies with members or shareholders which are set up with social objectives and are run primarily for the benefit of the community (rather than to generate profits for their stakeholders). Profits from trading activities are reinvested in the business or in the community

Question 8

SITR

What conditions must the social enterprise meet?

Answer 8

• be unquoted;
• meet the financial health requirement;
• have fewer than 250 full-time employees;
• have gross assets of not more than £15 million before the investment and not more than £16 million after the investment;
• not be under the control of another company; and
• only have 51% subsidiaries.

Question 9

Any excluded activities for the social enterprise?

Answer 9

The social enterprise must carry on a trade and not undertake excluded activities (eg share dealing, money lending, property development etc).

Question 10

SITR

Tax relief is given how?

Answer 10

as a tax reducer of 30% of the amount invested up to a maximum investment of £1 million per tax year. The relief cannot exceed the tax liability for the year

Question 11

SITR

Tax relief is given for the tax year in which ….

There is a ‘carry back’ facility which allows all or part of the investment to be treated as ….

The investment must be held for _____ years for relief to be retained.

A disposal within ______ years will lead to relief being ______________ withdrawn.

Answer 11

the investment is made.

made in the previous tax year.

three

three, wholly or partly