HMRC have published the following guidance:
- Community Investment Tax Relief – find out about the Community Investment Tax Relief scheme if you invest in accredited community development finance institutions;
- Claiming Community Investment Tax Relief – what you need to know before using the Community Investment Tax Relief scheme; and
- Complete a Community Investment Tax Relief certificate – if you are an accredited community development finance institution, fill in this certificate for eligible investors to claim tax relief.
The CITR scheme provides a tax incentive to investors in enterprises within under-invested communities. The incentive is available to individuals and companies that invest in accredited intermediary organisations, called Community Development Finance Institutions (CDFIs), which in turn on-invest in enterprises that operate within or for disadvantaged communities.
So the CITR scheme encourages the growth of CDFIs, which specialise in investing in businesses, social and community enterprises within under-invested areas. The scheme applies only to investments made through accredited CDFIs – direct investment in enterprises within disadvantaged communities does not qualify for CITR.
The tax incentive is a form of tax relief, which reduces the investor’s income tax or corporation tax liability.
- The relief is worth up to 25% of the money invested, spread over five years.
- To obtain maximum tax relief under the scheme investors must hold the investment for at least five years. But there is scope for investors to receive some return on their investment over the course of those five years without sacrificing all of the relief that the scheme provides.
The CITR scheme is jointly run by HMRC and the Department for Business, Energy & Industrial Strategy (BEIS). BEIS is responsible for matters concerning the accreditation of CDFIs. HMRC gives effect to any relief to which the investor may be eligible and, if necessary, withdraws any relief no longer due.