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Give it back, George: CITR needs to be extended, not capped

Give it back, George24.04.2012

Why Community Investment Tax Relief MUST NOT be included in charitable giving cap

CITR (Community Investment Tax Relief) encourages investment into disadvantaged communities. But last week, HM Treasury confirmed that CITR will be included its proposed cap on tax relief. Yet recently in January, a cabinet office spokesman had stated that: “We will be looking into how gaps and inconsistencies in the tax system limits the growth of the social investment market and will be consulting the sector ahead of the budget on how to make Community Investment Tax Relief (CITR) more effective.”

CDFA’s chief executive Ben Hughes says the effect will be to suppress social investment – exactly the opposite of what the Government stated it wanted to support:

“We are perplexed and surprised that CITR has been captured within this charitable giving tax relief cap. Community finance is often the ONLY source of finance for creditworthy – but financially excluded – social enterprises and small businesses, especially in deprived communities. Community finance providers – CDFIs – are a huge success story, but they need more capital to support the huge demand from viable social enterprises and businesses needing access to finance.

“Recent research published by Charity Bank – using the Government’s own formula – showed a return of £7 to society from community enterprises for every £1 forgone via CITR. Community Investment Tax Relief should be extended, not capped.”

CDFA is not the only organisation to be puzzled. Peter Holbrook, Chief executive of Social Enterprise UK, commented to Civil Society magazine that “the cap on social investment has baffled the social enterprise sector. Earlier this month we saw the prime minister launch Big Society Capital – which has pumped an impressive £600m into the social investment market. Now it seems the government has seriously undermined its commitment to growing the market by creating more barriers to social investment before it’s properly off the ground.”

The CITR scheme was introduced in 2002 to support investments in local communities and social enterprises. It gives 25 per cent tax relief to investors who invest in accredited community development finance institutions, which lend to social and micro enterprises and individuals unable to access finance from other sources. Since its introduction £77m has been raised, supporting the provision of ethical and affordable finance in some of the UK’s most disadvantaged communities.

CDFA is supporting the Give it Back, George campaign for the Chancellor to reverse his decision and exempt charitable donations from the plans to cap personal tax relief.

Where next?

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