27 January 2011.
Sheila Gilmore, MP for Edinburgh East, has tabled an Early Day Motion calling for more favourable tax reliefs to encourage investments into social enterprises 
such as CDFIs. The EDM calls for:
- the government to tackle low levels of investor and investee awareness of the existing reliefs
- removing restrictions to Community Investment Tax Relief
- amending Enterprise Investment Scheme Relief to include companies limited by guarantee
- the government to undertake a detailed examination of how progress could be made to ensure that social enterprises can grow and achieve their full potential in the same manner as small private equity-backed companies.
The Scottish Social Enterprise coalition, armed with information on suggested CITR changes from the cdfa, have been lobbying heavily on this issue. Indeed, three leading Highlands-based social entrepreneurs met with their local MP, Danny Alexander, chief secretary to the Treasury last week to discuss the issues of tax reliefs and social enterprises. Timely, as the government are currently in the process of reviewing the Community Tax Relief Scheme in the wake of it state aid expiry in 2012. The cdfa has lobbied heavily for the continuation and improvement of the scheme in order to increase the level of private capital channeled into CDFIs.
Following a meeting between the cdfa and MP Sheila Gilmore the issue of Community Investment Tax relief has also been raised in Westminster to Financial Secretary to the Treasury MP Mark Hoban.
Sheila Gilmore: “I am interested in the Government’s view on reforming the Community Investment Tax Relief to assist community development financial institutions, so that they can expand their business without necessarily being wholly dependent on grant assistance. That would enable such an important strand of financial inclusion to continue.”
Mr. Hoban: “Community investment tax relief is an important way of providing support. That tax is due for review shortly, and we will work with a full range of stakeholders to consider the options available for reform.”
A positive message seems to be coming from government before the decision on the future of Community Investment Tax Relief is taken. The cdfa will monitor the situation closely, continuing to press the key players, and we will keep our supporters and members apprised of any developments.
The cdfa encourages all its members and supporters to lobby their local MP, raising the issue of tax relief and the need for incentives to encourage investment into social enterprises such as CDFIs.
Details on the Early Day Motion can be found here
Note to editors:
Community Investment Tax Relief (CITR) is a scheme devised to encourage private investment into the CDFI sector by allowing accredited CDFIs to offer investors 5% per annum tax relief over five years. Investment raised must be for lending to business or social enterprises in disadvantaged communities. Since inception, CITR has attracted a total amount of investment of around £63m into the sector.
For a list of accredited CDFIs please visit the BIS website