Community Investment Tax Relief (CITR)

Community Investment Tax Relief (CITR)

The purpose of Community Investment Tax Relief is to bring a factor of business encouragement and revival in disadvantaged communities. This is done on purpose for the business in such areas and tax relief is provided to investors. These investors are expected to support businesses in areas that are considered less advantageous in the business world.

This is a great deal for the growth of business in the less advantaged areas by investing in accredited Community Development Finance Institutions (CDFIs). People and companies can avail of tax relief which is a great option to revive a business. Every year 5% tax relief is allowed to claim and this is started from the very initial year of the investment.


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Purpose of Community Investment Tax Relief

The question that arises here is what is the purpose of community investment tax relief. Generally, CITR refers to the two prominent objectives. This includes the following:

  • Revival of the business in the less advantageous areas and support Community Development Finance Institutions.
  • Enhance the tendency of private investments in the areas that are considered to be disadvantaged for business valuation.

Furthermore, it is important to know that community investment tax relief is purely carried out by the department for business and by HMRC. Certain departments are liable for their specific responsibilities in this regard.

Department of Business, Energy & Industrial Strategy (BEIS): To manage the scheme of tax relief is the sole responsibility of BEIS. The accreditation of the new Community Development Finance Institutions is also under the handling of BEIS.

HR Revenue and Customs: HMRC works as the adviser of the investor and guides when is it possible to claim community investment tax relief. As well as when there is no possibility to give it the go-ahead.


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Who Can Invest In Community Investment Tax Relief?

A range of groups is allowed to join the group of investors and offer investments, which brings versatility to Community Investment Tax Relief. The banks, business associated individuals and other such corporations are allowed to make their investments and offer further deals.

Moreover, it is allowed for CDFIs can raise on-lending CITR investments. This is possible through the following listed ways.

  • Securities: There is a possibility of purchasing offered accredited by CDFIs. If you are wondering about the rules related to this. They are just the same as issues of shares.
  • Deposit Accounts: Accredited CDFIs can possibly offer CITR as well if they offer bank accounts.
  • Equity Investments: Equity investment is normally raised when the shares are sold out.
  • Loans: Such loans can be received from individuals who are associated with businesses, banks, and corporations as investments.

Moreover, finance is offered to non-profit organisations as well as profit organisations. Both types can avail of this offer by CDFIs.


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Final Thoughts

Finally, the discussion of the Purpose of Community Investment Tax Relief can be summed up as you have learned the important facts that are relevant. Although community investment tax relief attracts the investors to invest in the areas that are known to be disadvantaged, however, the guarantee of success and safety is not ensured.

It is better to seek professional advice before you decide to make investments to gain the most benefit from community investment tax relief.


Disclaimer: The information about the Purpose of Community Investment Tax Relief, provided in this article is general in nature. It does not intend to disregard any professional advice.


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