The Exchequer Secretary to the Treasury Damian Hinds today (7 October 2015) visited one of north Manchester’s success stories - FC United of Manchester - to highlight the government’s commitment to supporting social enterprises and see first-hand the positive impact social investment tax relief (SITR) has had on the club and the local community.
Social enterprises often find it particularly hard to raise the finance they need to grow. The government’s tax relief, the first of its kind of be introduced internationally, rewards individuals who invest in social enterprises.
FC United have successfully used the tax relief to raise £270,000 from investors since 2014, helping them build a new stadium and engaging over 2000 members of the local community – including leading youth projects for vulnerable children.
During the visit to the new stadium, which comes ahead of Social Saturday, the Minister met with the club manager and members of the club’s youth team.
The Exchequer Secretary, Damian Hinds said
Our social investment tax relief is helping charities and social enterprises do more, ensuring they can access the capital they need to grow.
Since the scheme launched in 2014, we’ve seen organisations from across the UK, such as FC United, go from strength to strength.
Andy Walsh, General Manager of FC United of Manchester said:
FC United is proud to be a pioneer in the field of social finance and community fundraising.
Based on a robust business plan, FC United is raising capital using SITR to support the development of the club’s stadium and community facilities to deliver sporting, education, employment and environmental benefit to the local community.
Our funders will get something back for their investment but the key element that differentiates social finance from other funding opportunities is the social impact. In FC United’s case social finance has been about ordinary people from all walks of life coming together to achieve extraordinary things.
Figures from HMRC today confirmed that since the scheme opened in April 2014, the government has had over 40 organisations apply for clearance to raise SITR eligible investment.
SITR is expected to unlock over £500 million of investment directly into the social sector by 2020.
The government is also awaiting state aid approval to increase the amount of social investment eligible for the tax relief. Under the plans proposed by the government, social enterprises will be able to receive up to £15 million in total, an increase from the current limit of around £270,000.
Plans to further the SITR scheme include a new Social Investment Venture Capital Trust, which will allow investors to claim income tax relief up to 30 percent of the amount invested. With the added bonus that any returns, be it gain on sale or repayment of the investment will be tax free. Any loses will offset the investors payable income tax in that same year. The EU is yet to agree the proposal.
A study by RBS Enterprise Tracker states approximately 20% of aspiring entrepreneurs aim to start a social enterprise, with 1 in 4 London start-ups now a social enterprise.
360,000 social enterprises employ 2.3 million people, turning over £120 billion, which makes up 1/5 of UK businesses. Such businesses are more likely to support local communities, 82% reinvesting profits locally.
Big Society Capital run “GET IT”, a free programme of support and advice for social enterprises and charities that are interested in SITR. This is available through the Big Society Capital website.