Social investment tax relief
Executive summary
As this Call for Evidence makes clear, Social Investment Tax Relief (SITR) has been used substantially less than was anticipated when it was first introduced in 2014.
Initially, HM Treasury forecast an annual cost of up to £35m a year and yet it cost less than £2m in total for the first three years of operation.
There are almost 500,000 social enterprises in the UK (forming just under 10% of the SME community). Many of these enterprises will not be eligible for SITR either by having a turnover above £15m, more than 250 employees or not undertaking a qualifying activity. Likewise, AAT accepts that many qualifying enterprises do not need or want investment. However, the size of the market and general need for investment suggests something must be wrong with SITR for so few to have applied for it and fewer still to have utilised the relief.
Rather than concluding low take-up means such relief is unnecessary, AAT believes it is worth considering possible design flaws, the application process and how government has communicated its availability.
Related consultation responses
Research and development (R&D) tax reliefs: consultation on a single scheme
We agree that a single scheme would be beneficial. However, it should not neglect the need to provide a targeted higher rate relief to small businesses.
Tax reliefs inquiry
We believe there's room to reform major relief expenditures. We also recommend halving the headline rate of Inheritance Tax and reforming pension tax relief.
Property income review: call for evidence
While we appreciate that a single tax regime for all types of lettings would be simpler, it seems reasonable that different tax regimes should apply to each.
Small business strategy: Business and Trade Select Committee inquiry
We recognise the recent progress made but further action is needed to address barriers to growth for small businesses. Late payments remain a major issue.
