Social Investment Tax Relief (SITR) can be used by eligible social enterprises, charities and community businesses to raise patient, flexible and more affordable capital for their trading activities. It offsets the risk to investors by offering a 30% tax relief on qualifying investments. For the organisation raising the investment, it can provide routes to investment which offer better value and could potentially be less costly than other sources of investment.

SITR for us has been incredible. I don't know that Second Shot would have been able to get off the ground without it.

SITR for us has been incredible. I don't know that Second Shot would have been able to get off the ground without it.

Julius Ibrahim, Founder, Second Shot Coffee

Second Shot Coffee & SITR

In a short video, Julius shares how Second Shot Coffee is tackling homelessness with the help of coffee and SITR.

What type of capital can SITR raise?
loan or equity
Negotiate terms
Negotiate terms acceptable with your investors
Window of 3 years and 1 day before repayments start on the capital borrowed
Risk is offset
Cost of finance subsidised with a 30% tax relief for investors
How does SITR work?

Here, we take you through the process for using Social Investment Tax Relief to raise investment and how to claim the tax relief after the investment is completed. 


Stages to using SITR to raise investment

There are 4 key stages, which we outline in more detail with links to resources to help you with each step below. The final stage is completing the investment. 


1. Check eligibility
  • Only organisations with certain legal structures are eligible
  • Some trading activities don't qualify for SITR
2. Investor research

Possible investment sources

  • SITR fund
  • Using a crowdfunding platform
  • Finding individual investors directly (minimum 4 or with no more than 30% of the debt)

Investment size, type & terms

  • Amount of debt or equity
  • Term of investment: duration and interest
3. Apply for Advance Assurance with HMRC
  • Not compulsory but it is highly advisable
  • The process currently takes between six and 14 weeks for a response so do make sure you build it into your timetable
4. Investment preparation
  • Secure investor source(s)
  • Complete legal documentation (investment proposal and loan agreement)
  • Agree date for transfer of funds with investors
  • Agree date for commencement of loan contract

You can find example loan agreements under the relevant type of SITR investment.

5. Complete the investment
  • Ensure all the money has been transferred in advance of the start date of the loan contract and ensure no investor holds more than 30% of the debt
  • Make a note of the date of each time an investment is made (this will be needed for completing the compliance process so that the investor can claim the relief)

Stages to claiming the SITR tax relief

There are 4 key stages to this process, which happens after the investment is made: the first 3 are done by the organisation who raised the investment and the last stage is completed by each investor so they can claim the tax relief. Each of these stages are outlined in more detail with links to resources below.

Process to claiming the tax relief

1. Complete and submit a compliance statement to HMRC

Compliance statement (form SITR1)

  • This is a form setting out the details of the investment and the investors, which you can access from HMRC's website
  • It needs to be submitted to HMRC each time a new investment is made
  • Earliest date for submission: trading activity funded through SITR must have begun and been sustained for at least 4 months
  • Latest date for submission: no later than 2 years after the end of the tax year in which the investment was made (or 2 years and 4 months after the qualifying trade has started)


  • Must be issued to each investor so that they may claim the relief
2. Receive confirmation investment is SITR eligible from HMRC

If HMRC confirms the investment is eligible for SITR, you should receive:

  • Confirmation letter (SITR2)
  • Compliance certificate for each investor (form SITR 3) - part of this will also include a SITR claim form
3. Complete the compliance certificates and sent to each investor

Each compliance certificate will need to include the unique investment reference number (which you can find on the letter) before being sent to the investors.

4. Investors claim the tax relief

Once an investor has received a compliance certificate, they will be able to claim the Income Tax Relief.

Repayment of the investment
Repayment of debt
  • Minimum of 3 years and 1 day capital holiday
  • If applicable, interest can be paid throughout the loan period
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