HMRC have given Advanced Assurance that the shares issued under the current share offer should qualify for Social Investment Tax Relief (SITR), but what does that actually mean for someone looking to invest?
Because Longparish Community Pub Ltd (LCPL) is a social enterprise with a social purpose to achieve community benefit through the organisation – delivering a social return, rather than being principally motivated by profit or commercial return, there are tax incentives available to help attract potential investors.
The key benefits from SITR for qualifying tax payers when investing in LCPL will be:
• Income Tax Relief of up to 30% of the amount invested
• Deferral on Capital Gains Tax (CGT) by reinvesting into SITR shares
• Business Relief - 100% exemption from Inheritance Tax (IHT)
• Share Loss Relief - helping to mitigate cost of any loss.
Income Tax Relief applies to the current tax year, or can be carried back to the previous year.
Deferral for CGT can be applied to the current or next tax years, or carried back for capital gains made in the three previous tax years, meaning you could receive back taxes already paid. This is in addition to Income Tax Relief.
Loss Relief is applied to taxable income for the value of the loss incurred, so saving income tax at the highest marginal rate for the tax year when the loss is incurred.
There are more details, along with some examples, in the Community Shares Offer document. If you think this is something that might affect your investment decision, please seek professional tax advice!