About CITR
What is CITR?
The Community Investment Tax Relief (CITR) scheme encourages investment in disadvantaged communities by giving tax relief to investors who back businesses and other enterprises in less advantaged areas by investing in accredited Community Development Finance Institutions (CDFIs). This is the terminology used by the Government to describe responsible finance providers who are accredited to use CITR.
The tax relief is available to individuals and companies and is worth up to 25% of the value of the investment in the CDFI. The relief is spread over 5 years (5% claimable each year), starting with the year in which the investment is made.
The objectives of CITR are:
- To stimulate private investment into disadvantaged communities
- To support a thriving CDFI sector
The CITR scheme is jointly run by HMRC and the Department for Business, Energy & Industrial Strategy (BEIS). BEIS is responsible for accreditation of new CDFIs and the ongoing management of the scheme. HMRC oversees the relief and can advise the investor where CITR is claimable and, if necessary, where no relief is due.
To date it is estimated that £145 million in private investment has been raised by CDFIs using CITR.
There are currently 33 accredited CDFIs that can take on CITR investment.
Who can invest?
CITR is a versatile scheme, enabling a range of different kinds of investment from various investor groups:
- Individuals
- Banks
- Other corporations
CDFIs can raise CITR investment for on-lending through:
- Loans which can be investments from banks, corporations and individuals.
- Equity investment raised through the sale of shares. Accredited CDFIs that have a community benefit legal structure (formerly called IPS) have raised money through the issue of shares. Individuals and corporations can purchase shares and benefit from CITR.
- Deposit accounts Accredited CDFIs that offer bank accounts can offer CITR.
- Securities Investors can purchase securities offered by accredited CDFIs. The rules around securities are similar to those which govern the issue of shares.
Who can receive investment?
CDFIs provide finance to enterprises (both profit-seeking and non-profit-seeking) within disadvantaged communities. ‘Retail’ CDFIs invest directly in enterprises within such areas. There are also provisions within the regulation for ‘wholesale’ CDFIs to provide finance to retail CDFIs that in turn invest in suitable enterprises.
Relief under the CITR scheme is only available in respect of investments in those CDFIs (retail or wholesale) that have been ‘accredited’ by the Secretary of State. Accredited CDFIs have ongoing obligations to satisfy the requirements of the scheme and are expected to reapply for accreditation every three years.
Accreditation of a CDFI does not guarantee the safety or success of any investment in that body. It simply means that it currently satisfies the requirements enabling investors to qualify for relief under the CITR scheme.
A list of accredited Responsible Finance members can be found below:
Business & Enterprise Finance (BEF)
Cooperative and Community Finance
Coventry and Warwickshire Reinvestment Trust (CWRT)
Enterprise Loans East Midlands
Saltend Community Development Company (Sirius)
South West Investment Group (SWIG)
Ulster Community Investment Trust
A full list of CDFIs accredited for CITR can be found here.