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HMRC internal manual

Community investment tax relief manual

Outline of the CITR Scheme

The Community Investment Tax Relief (CITR) scheme (sometimes called the Community Investment Tax Credit scheme) is intended to stimulate private investment in disadvantaged communities by providing a tax incentive to individuals and companies that invest in not-for-profit and profit-seeking enterprises in or serving those communities.

The tax incentive is targeted at investors in accredited intermediary organisations, which then invest (directly or indirectly) in enterprises in or serving disadvantaged communities. The CITR scheme aims to encourage the growth of these intermediary organisations, termed Community Development Finance Institutions (CDFIs), which specialise in providing funding to businesses, social and community enterprises within under-invested areas.

The tax incentive is a tax relief.

Subject to certain conditions, CITR is available to an

  • individual or company
  • who invests (by way of loan, securities or share capital) - see CITM4005,
  • in an accredited Community Development Finance Institution (CDFI) - see CITM2005

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 very 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.

But not all bodies within these categories would necessarily satisfy the criteria for accreditation under the CITR scheme (CITM2020).

The tax relief is worth up to 25% of the value of the investment in the CDFI and is spread over five years, starting with the year in which the investment is made (CITM6005).

Further Information

Potential investors: Individuals or companies considering investing under the scheme may find the brief guide at CITM9900 useful.

CDFIs: See CITM2010 for details on the role of the Small Business Service and how to contact it.

Legislation: Details of the legislation relating to the CITR scheme are at CITM1030.