Investors in social enterprises could benefit from similar tax treatment to enterprise investment schemes, Dermot Campbell has said, giving ethical investors more opportunities.
The managing director of multi-manager EIS platform Kuber Ventures, said investors may be able to achieve good returns and tax benefits from social enterprises, such as doctors’ surgeries, care homes, schools and hotels.
He said: “We are receiving increased enquires from investors and financial advisers about SITR and we are sitting down with fund managers and Treasury in April to discuss the opportunities and how SITR can benefit investors.”
Social investment tax relief is a relief for individuals who invest in social enterprises that are defined broadly as community interest companies, community benefit societies or charities.
The government will allow a transition period of six months following state aid clearance for the expansion of SITR before eligibility for EIS, seed enterprise investment schemes and venture capital trusts is withdrawn.
The associated tax reliefs are similar to EIS, in that investors can invest a maximum of £1m in qualifying social enterprises, they must hold shares for a minimum of three years and can claim to reduce their income tax liability by 30 per cent of their investment, they can defer capital gains tax liabilities, and any capital gains are tax-free upon disposal.
Mr Campbell said Kuber Ventures was hoping to launch a SITR portfolio in the next tax year.
Adviser view
John Ditchfield, director for London-based Barchester Green, said: “I am always happy to see the government offer tax relief to social enterprises.
“However, a social enterprise has limited share capital and possibly limited liquidity. It is unclear how the investor will get his money out, and what the effect will be on inflation.
“A community interest company is probably the right vehicle, a hybrid between not-for-profit and a company that is for profit, and may have the flexibility to return some capital to investors.”
