What is social investment tax relief?
Answered 11 March 2026
Social Investment Tax Relief (SITR)
What the law says
Overview and statutory basis
Social Investment Tax Relief (SITR) is provided for in Part 5B of the Income Tax Act 2007 (ITA 2007), introduced by the Finance Act 2014. It provides income tax relief ("SI relief") for individuals who invest in social enterprises — described as "entitlement to tax reductions in respect of amounts invested in social enterprises by individuals."
A companion CGT relief is also available under Schedule 8B to TCGA 1992 for gains reinvested in social enterprises.
What is a "social enterprise"?
A social enterprise for SITR purposes means:
- a community interest company;
- a community benefit society (that is not a charity);
- a charity;
- an accredited social impact contractor; or
- any other body prescribed by Treasury order.
Eligibility
An individual investor is eligible for SI relief if:
- the investment is made by the investor on their own behalf;
- it was made on or after 6 April 2014 and before 6 April 2023 (the deadline having been extended from 6 April 2021);
- the conditions in Chapters 3 and 4 of Part 5B are met.
An investor is not eligible if they have already obtained EIS, SEIS, or Community Investment Tax Relief (CITR) in respect of the same amount, or if that amount has been set against a chargeable gain under EIS reinvestment rules.
Form and amount of relief
Where eligible and a claim is made, the investor is entitled to a tax reduction (at Step 6 of the ITA 2007 s.23 calculation) for the tax year in which the amount was invested.
The amount of the reduction is tax at the SI rate of 30% on the amount invested, capped at £1 million per tax year.
"In this Part 'the SI rate' means 30%."
An investor may also elect to carry back part of the investment to the preceding tax year.
Qualifying investments
The investment must be in:
- New shares issued by the social enterprise (which must not carry fixed returns and must rank after debts on winding-up); or
- Qualifying debt investments (debentures with no fixed charge on assets, at no more than a reasonable commercial rate of return).
Investor restrictions
The investor (and their associates) must not, during the applicable period, be an employee, partner, trustee, or remunerated director of the social enterprise or its subsidiaries.
Withdrawal of relief
SI relief may be withdrawn or reduced if, for example:
- the investor receives value from the social enterprise during the applicable period;
- the investor disposes of the investment before the end of the shorter applicable period.
HMRC guidance / practice
HMRC operates an advance assurance service for social enterprises, administered by the Venture Capital Reliefs (VCR) Team. An advance assurance indicates that HMRC considers the requirements of Chapters 3 and 4 of Part 5B are likely to be met, but:
- It does not guarantee that relief will not be reduced or withdrawn later;
- It does not confirm that individual investors meet their own eligibility conditions;
- It is not valid if the social enterprise has not disclosed all relevant facts, or if circumstances change before the share issue;
- It applies only to the specific share issue or debt investment in question — it cannot be relied upon for a different issue.
HMRC will only grant an advance assurance if it considers the proposed investment will meet the SITR rules.
Citation sources
PART 5B Tax relief for social investments CHAPTER 7 Withdrawal or reduction of SI relief Value received by the investor Effect of the investor receiving value from the social enterprise 257Q 1 If the investor receives any value from the social enterprise at any time in the longer applicable period, any SI relief given in respect of the investment must— a if it is greater than the amount given by the formula set out in subsection (2), be reduced by that amount, and b in any other case, be withdra
PART 5B Tax relief for social investments CHAPTER 1 Introduction Form and amount of relief 257JA 1 If an individual— a is eligible for SI relief in respect of any amount, and b makes a claim in respect of all or some of the amount, the individual is entitled to a tax reduction for the tax year in which the amount was invested. This is subject to the provisions of this Part. 2 The amount of the reduction to which an individual is entitled under this Part for any particular tax year is the amount
PART 5B Tax relief for social investments CHAPTER 3 Eligibility: conditions relating to the investor and the investment Investment to be in new shares or new qualifying debt investments 257L 1 At all times during the shorter applicable period, the investment must be in— a shares that meet conditions A and B and are issued to the investor by the social enterprise in return for the amount invested, or b qualifying debt investments of which the investor is the holder in return for advancing the amo
PART 1 Income tax, corporation tax and capital gains tax Reliefs for business Extension of social investment tax relief for further two years 20 In— a section 257K(1)(a)(iii) of ITA 2007 (date by which investment must be made to qualify for social investment tax relief), and b paragraphs 1(3)(b) and 2(2)(b) of Schedule 8B to TCGA 1992 (date by which gains re-invested in social enterprises must accrue to qualify for hold-over relief), for “6 April 2021” substitute “ 6 April 2023 ” .
PART 5B Tax relief for social investments CHAPTER 2 Eligibility for relief: basic rule and key definitions Eligibility Eligibility for SI relief 257K 1 An individual (“the investor”) who invests in a social enterprise is eligible for SI relief in respect of the amount invested if— a the investment is made— i by the investor on the investor's own behalf, ii on or after 6 April 2014, and iii before 6 April 2023 (but see subsection (5)), and b the conditions set out in Chapters 3 and 4 are met. 2 S
The response to an application for an assurance will usually take the form of a statement as to whether, on the basis of the information provided, HMRC would be able to authorise the social enterprise to issue certificates under ITA/S257PC in respect of the shares or qualifying debt investment to be issued following receipt of a form VCSSITR1 satisfactorily completed. The granting of an assurance is an indication that HMRC considers that the requirements in Chapters 3 and 4 of Part 5B are likely
PART 5B Tax relief for social investments CHAPTER 1 Introduction Meaning of “ SI relief” and “social enterprise” 257J 1 This Part provides for income tax relief for social investments (“ SI relief”), that is, entitlement to tax reductions in respect of amounts invested in social enterprises by individuals. 2 In this Part “ social enterprise ” means— a a community interest company, b a community benefit society (see section 257JB) that is not a charity, c a charity, d an accredited social impact
PART 1 Income tax, corporation tax and capital gains tax CHAPTER 4 Other provisions Social investment relief Relief for investments in social enterprises 57 1 Schedule 11 makes provision for and in connection with social investment tax relief. 2 Schedule 12 makes provision for relief under TCGA 1992 in connection with investments in social enterprises.
e compliance certificates were the social enterprise to carry out its intentions as described and then to submit a compliance statement following an issue of shares or a new qualifying debt investment. This requires HMRC to form a view as to whether the conditions of the scheme would be satisfied, on the assumption that the social enterprise provides its compliance statement in accordance with the information and undertakings given in the advance assurance application. The purpose of the service