Investing, whether through pensions, ISAs or purely deposit accounts, purely for your own personal gain is understandable, we all want to improve our own financial position and that of our families, but investing with a conscience is often considered something purely for the financially well heeled, who can afford to become charitable and engage with their social consciousness, giving something back so long as it doesn’t impact too much on their own financial well-being. The word philanthropy is used to describe the charitable foundations created by the likes of Bill Gates for instance.
Maybe this is starting to change, at least a little, as since their introduction in 2014 the government has been promoting, Social Enterprise Investments, a means of investing sometimes quite modest sums into organisations which are run to benefit society rather than purely make profit. An increase in the tax incentives given to investors announced in the Autumn Statement 2016 will also help to put this form of investing more clearly on the investment radar, albeit they can only be marketed to wealthy sophisticated investors.
Making a qualifying investment into a social enterprise, including a qualifying charity, provides you with tax reliefs (SITR) which come in the form of:
- income tax relief of 30% calculated from the amount you invest
- ability to defer a Capital Gains Tax charge you might have if you re-invest the profits into a social enterprise
- after 3 years, let you sell or give away SITR-qualifying investments that have gained in value, without paying Capital Gains Tax on the profits made
SITR is designed to help raise money to support the trading activities of social enterprises or charities which will include, as HMRC describe them:
- a community interest group
- a community benefit society, with an asset lock
- a charity which can be a company or a trust
Examples of such social enterprises include those helping young people improve their educational attainment and reduce youth unemployment, whilst others look to improve the lives of disadvantaged people in the UK. Others have provided loans to Community Land Trusts and other community groups to provide rental properties for local communities at affordable prices.
As independent advisers we look at the widest range of investment options. We research and analyse financial products, scrutinise fund managers; their charges and financial strengths. We look at how appropriate these options are to each of our client’s requirements: all to provide a recommendation personalised to their needs. If we do this with a social conscience too, then even better.
Mark Ireland Chartered ALIBF
This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. All statements concerning taxation are based on our understanding of the current law and HMRC practice, and proposed changes, as at the date of publication. Professional advice is necessary for every case. The value of investments may fall as well as rise and you may not get back the full amount invested.