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Melanie Mills, Social Sector Engagement Director @Mel_BigSocCap

Melanie Mills, Social Sector Engagement Director @Mel_BigSocCap. What is it? Why do we need it? Who can use it? What can you use it for? Where do I get the money from?. What is Social Investment Tax Relief?. What is it?.

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Melanie Mills, Social Sector Engagement Director @Mel_BigSocCap

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  1. Melanie Mills, Social Sector Engagement Director @Mel_BigSocCap

  2. What is it? • Why do we need it? • Who can use it? • What can you use it for? • Where do I get the money from?

  3. What is Social Investment Tax Relief?

  4. What is it? • It’s a way in which social enterprises can raise funds by way of investment, and offer their investors tax relief • Designed to help fill the “funding gap” for social enterprises • Works like this: • Individualinvests money into a social enterprise by way orsharesor debt • Individual claims tax relief on the amount invested • The social enterprise applies the funds in a trading activity • After three years (or longer) the investment is sold or repaid

  5. Why Do We Need It?

  6. Who Can Use it? • Charities – can be a trust or a company • Community Interest Companies – by share or guarantee • Community Benefit Societies – not be a social landlord • Accredited Social Impact Contractor(typically a special purpose vehicle that will issue social impact bonds to raise finance for a particular project) • Other than social impact contractors, these are all forms of organisation which: • Are overseen by a regulator (other than HMRC), and • Are subject to asset locks and restrictions on paying out profits to members • Has less than 250 employees AND Less than £15m assets

  7. How much can you raise? • Two Tier System • Eligible organisations more than 7 years old • £290K in any rolling three year period. Any “de minimis” State Aid received by the social enterprise during the previous three years (including any previous SITR funding) will count towards that £290K limit • Eligible organisations less than 7 years old • £1.5m under SITR over its lifetime However there are two key restrictions on this new £1.5m limit: Any “risk finance state aid” previously received by the social enterprise will count towards that £1.5m limit.

  8. Essential Guide to SITR https://www.bigsocietycapital.com/sites/default/files/GET%20IT%20leaflet%20NEW%20May%202017.pdf

  9. The Naughty List! • MUST BE USED TO SUPPORT A TRADING ACTIVITY • Any trade can be supported with SITR except: • Dealing in land, commodities or futures or in shares, securities or other financial instruments • Banking, insurance, money lending debt-factoring, hire-purchase finance or other financial activities including refinancing existing loans • Property development • Energy • Leasing, licensing and assets on hire • Agriculture and fishery • Road freight transport • Providing services or facilities to another business where that other business would not qualify for SITR

  10. How do I know if I can use SITR? • Pre-assurance Process • The process of applying to HMRC to get approval that SITR will be available to your investors • Takes 6 weeks • Answer all the questions as the assurance is only valid based on the information you did provide (not what you didn’t!) • Webinar, guide and slides to help • COMING SOON • Editable Pre-assurance application form

  11. CASE STUDIES

  12. FREEDOM BAKERY

  13. The Spotted Cow www.thespottedcowholbrook.co.uk Impact Key Statistics Challenge Revenue model Duration: 3 years (min) The Spotted Cow serves over 1,500 residents and hosts book clubs and events and is home to the village Post Office, a First Aid responder and a meals on wheels service for older people. Investment via community shares eligible for Social Investment Tax Relief(SITR) was raised on Crowdfunder. This was matched by Crowd Match Fund and repaid with income of the pub and Post Office.  Pubs are closing down at an average of two per week in the UK. The Spotted Cow in Holbrook, Derbyshire, recently closed and was due to be converted to housing, depriving local residents of a valuable community asset.  Cost of capital: 3% Turnover: £100,000 Investment: £277,000

  14. www.goodfinance.org.uk

  15. HELP & SUPPORT

  16. How Do you Find Out More ? READ WATCH READY TO PROCEED? Sign up for more information on the Social Investment Tax Relief. https://www.bigsocietycapital.com/what-we-do/current-projects/social-investment-tax-relief/get-sitr

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