UK's Autumn Statement: Tax relief for investment in social enterprises and social impact bonds to be introduced in April
The social investment tax relief is set to become a reality, Chancellor George Osborne announced today in the UK's Autumn Statement.
Osborne's key message was that the plan is working – the economy is finally on the up, and unemployment is down. But, the Social Economy Alliance, a campaigning group, made up of 22 respected co-operative and social enterprises, universities, think tanks, charities and housing associations warned that today's Autumn Statement represents a 'make or break moment' to set the economy on a path to improve standards of living for all.
"The Government must create economic policies that support Britain's emerging social economy if it is to address the rising cost of living and growing inequality in the UK" said the Alliance in response to the statement. Both the comments on mutually-owned business models and tax relief for social investment were welcomed by the group.
Sir Ronald Cohen, chair of Big Society Capital also welcomed the tax relief. "Social organisations need serious tax incentives in order to attract capital for innovation and to scale their organisation’s efforts to improve people’s lives," he said in a statement released after the budget.
“We welcome these measures which begin, here in Britain, the bold process of extending to investment in social organisations the incentives available for SMEs."
But concerns around the design of the tax relief also came to the fore, as the UK Government shapes a road map for social investment to be published in January.
"We’re pleased that the social investment tax relief will apply to certain debt and equity products in charities," said the Charity Finance Group, "Hopefully this will mean simple unsecured loans will qualify for the relief – something we called for in our response. We’ll be interested to see the rate at which the relief is set and other terms," CFG added.
Nick O'Donohoe also re-iterated concerns aired during the consultation on the tax relief: "It is crucial that the final design of the Relief meets the needs of charities and social enterprises, while also acting as a real incentive to existing individual investors to use their money for social investment," he said.
Other issues raised during the consultation included the fear that the relief could be torpedoed by unresolved regulatory issues around State Aid, that it could be overly exclusive or used as a loophole for "would-be" social enterprises.
Sir Ronald said that there was an ongoing dialogue between Big Society Capital and HM Treasury looking to "finalise bold incentives in the New Year, obtain State Aids approval for higher investment limits, and define appropriate investment vehicles to attract investors."