HMRC has introduced a new tax relief to encourage individual investors to support social enterprises. It’s called Social Investment Tax Relief (SITR) and has been available to investments made on or after April 6 2014. It sounds wonderful: investors can claim one of more of the following:
Income Tax relief – at 30% of the amount they invest
Capital Gains hold-over relief – depending on when the investment was made and when the gain arose
Capital Gains disposal relief – an investment which has attracted Income Tax relief is exempt from Capital Gains Tax if the investor disposes of it for more than s/he paid
But to date, SITR has excluded any smallholdings, market gardens, community farms, set up as social enterprises (on the grounds that they qualify for CAP — which as they’re mostly less than 5 hectares in size they obviously don’t!).
The All Party Parliamentary Group on Agroecology, Plunkett Foundation, our own Funding Enlightened Agriculture, Ethex, and others, have held meetings with the then Minister, Nick Hurd, and Cabinet Office officials. As a result, the issue is now included in the HMRC Consultation on extending SITR.
The deadline for comments is September 18th.
Do please have your say!
Here are the relevant paragraphs:
3.17 Community agriculture
Agriculture and market gardening are excluded under EU state aid rules for de minimis schemes on the grounds that they already receive substantial public money through the common agricultural policy.
However, the government is aware that some social enterprises whose main trade is the production of agricultural or other grown products will not receive significant payments under the common agricultural policy from next year. This is because holdings of less than 5 hectares in England (3 hectares in Scotland) will be ineligible for direct subsidies under CAP.
Question 4: Do you think community farms and similar enterprises that have less than the threshold amount of land for CAP payments should be eligible for SITR? Please give reasons.
Do they have the same difficulties in raising finance as other social enterprises?
Please provide evidence to support your answer.