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Community Investment Tax Relief

For individuals and corporate bodies
 
What is it?

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.

Why has it been introduced?

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 and in the CITR Material published by the Secretary of State for Trade & Industry (4 pages).

What is the SBS's role in implementing CITR?

Enterprise Directorate manages the accreditation process for CDFIs wishing to use CITR. Officials of the Investment & SME Finance (ISF) Directorate of the Enterprise Directorate will review applications for accreditation received from CDFIs and brief members of the Community Development Finance Sub-Group of the Small Business Investment Taskforce (SBIT) who will recommend to the Secretary of State those CDFIs they consider meet the criteria for accreditation. Enterprise Directorate officials monitor accredited CDFIs annually.

How can I find out which CDFIs have been accredited?

Refer to the list of accredited CDFIs below (1 page).

How can I find out more?

Many frequently asked questions are answered in the Q & A brief (5 pages).

If you have any other questions please contact: 

Seb Aslan

Room 185

1 Victoria St

London

SW1H OET

Email:seb.aslan@berr.gsi.gov.uk
Tel:0207 215 6318
Fax:0207 215 6768