Applying for Community Investment Tax Relief

The Community Investment Tax Relief (CITR) scheme is designed to encourage investment in accredited Community Development Finance Institutions (CDFIs). The tax relief under the scheme is available to both individuals and companies.

CDFIs may take a range of forms including:

• community loan funds, which make capital available to community regeneration initiatives and businesses;
• micro-finance funds, which make small loans, usually at near-market rates of interest, to the smallest businesses, e.g. sole traders; and
• social banks - profit-seeking financial service providers or subsidiaries, dedicated to social or environmental objectives.

The scheme encourages investment in disadvantaged communities by giving tax relief to investors who back businesses (and other not-for-profit enterprises) in disadvantaged communities by providing additional tax relief. Tax relief of up to 5% per year is available for up to 5 years starting with the year in which the investment is made. This provides for a total tax relief of up to 25% of the invested amount.

The amount CDFIs can apply to relevant investments is currently £375,000 for non-profit organisations and £250,000 for profit organisations. The amount accredited CDFIs can raise through the CITR is currently £25 million for retail CDFIs and £100 million for wholesale CDFIs. HMRC’s list of CITR accredited CDFIs has recently been updated with the addition of 2022-23 aggregate investment data for Accredited Community Development Finance Institutions (CDFIs).

If you need advice on tax relief, speak to our friendly team of experts on email or give them a call on 01380 723692.