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A tax relief available to individuals and corporate bodies investing in accredited Community Development Finance Institutions (CDFIs), which then in turn provide finance to qualifying profit-distributing enterprises, social enterprises or community projects.
The tax relief available to the investor is five per cent per annum of the amount invested in the CDFI and may be claimed in the tax year in which the investment is made and in each of the four subsequent years.
A Community Investment Tax Credit (CITC) was one of the recommendations of the Social Investment Task Force's (SITF) report Enterprising Communities published in October 2000.
As proposed, the CITC concept envisaged the award of tax relief to those providing finance to CDFIs for on-lending to enterprises in disadvantaged communities that are excluded from mainstream sources of finance.
Government accepted the recommendation and detailed development of what is now known as the Community Investment Tax Relief (CITR) was undertaken as a collaborative project involving HM Treasury, Inland Revenue and the Enterprise Directorate.
The necessary legislation is contained within the Finance Act 2002, with more detailed operational information set out in the HM Revenue and Customs CITR Manual.
BIS’s Enterprise Directorate manages the accreditation process for CDFIs wishing to use CITR. The Community Development Finance Association (020 7430 0222, info@cdfa.org.uk) represents the community development finance sector and acts as the first point of contact for bodies wishing to apply for accreditation under the scheme.
Details of the criteria CDFIs need to meet, and annual return requirements (at Annex C) can be found in:
This should be read in conjunction with the CITR (Accreditation of Community Development Finance Institutions) Regulations (2003/96) as amended.
If you have any other questions please contact:
Email: citr@bis.gsi.gov.uk
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