§ Mr. BercowTo ask the Chancellor of the Exchequer when the community investment tax credit will be implemented; and how it will work. [52370]
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§ Mr. BoatengLegislation for the Community Investment Tax Credit is being brought forward in the Finance Bill. The scheme will come into force as soon as possible after state aids approval is obtained.
The scheme will offer tax relief to individual and corporate investors who make qualifying investments, through intermediaries, in enterprises in disadvantaged communities. The intermediaries must be accredited as Community Development Finance Institutions (CDFIs) under the rules of the scheme. CDFIs provide capital and technical assistance to businesses and social enterprises in disadvantaged communities that find it difficult to access mainstream commercial finance. Qualifying investments are debt or equity investments made for a minimum period of five years.
The amount of the tax relief is 5 per cent. of the amount invested for the tax year (or accounting period for a corporate investor) in which an investment which qualifies for the scheme is made, and for each of the following four years or periods, making a total of 25 per cent. of the amount of the investment in all. The tax relief is set against the investor's income tax or corporation tax liability as appropriate. So for example, an individual investing £10,000 in an accredited CDFI for at least five years could obtain a reduction in their income tax liability of £500 for the tax year in which the investment was made and for each of the four following years, making a total tax reduction of £2,500 over five years.