Ethical Performance
inside intelligence for responsible business


tax boost for investing in community

March 2003

A tax break for companies that invest in disadvantaged communities has come into force in the UK.

Corporate and individual investors who put their money into small businesses in deprived areas can now claim Community Investment Tax Relief at the rate of five per cent a year for a maximum of five years.

They will not invest directly in companies, but in intermediaries known as community development finance institutions (CDFIs), which will then either lend the money to eligible businesses, or buy shares in them.

The government’s Small Business Service, based at the Department of Trade and Industry, will be responsible for accrediting CDFIs, which will be able to invest in both non-profit and commercial enterprises in run-down areas.

The tax break was one of the main recommendations of the government-backed Social Investment Task Force, which reported to the Chancellor of the Exchequer in October 2000. It was included in the Finance Act 2002 and became law last month.


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