Here at Nesta Impact Investments we are pleased to hear about the new tax reliefs for social investment promised in the Autumn Statement. It’s been glaringly obvious for some years that we needed to bridge the gap between tax reliefs on charitable donations and small company and venture capital reliefs. If taxation can be used to incentivise socially useful behaviour, isn’t starting a social enterprise at least as good for the UK as starting a small private company?
Nesta’s has been researching the topic of social investment tax reliefs for some time. We first published a report on the topic in 2010, with the Centre for Study of Financial Innovation, and in 2011 we did a significant report on high net worth individuals and the mass affluent which found tax relief to be a significant factor when deciding to make a social investment. Last year, our work with financial advisors illustrated how a tax relief would get social investments on their radar.
We still need to see the detailed proposals, including what restrictions there will be. But what might this mean in practice for social sector organisations?