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opinion

SITR: a relief for all of us

Aspire & Ambition show that tax relief can be a powerful tool for social justice

Aspire & Ambition show that tax relief can be a powerful tool for social justice

Taxes are a good thing. They pay for our children’s education, our hospital visits and a host of other public goods. So why are we celebrating our first two investments to qualify for social investment tax relief?

As a society, we have a contrary relationship with paying taxes. We are outraged when we discover that multinationals that do a huge amount of business in the UK hardly pay any taxes at all here. We moan when ’fat cats’ make use of every tax relief under the sun to minimise their tax burden. But when it comes to our own finances, most of us would love to pay less tax.

Here at Triodos, we think that if tax relief is to be given, then at least it should be used to get more money flowing to organisations making a real social impact. That is why we are thrilled to have launched the first two social impact bonds to qualify for a new tax relief.

Ambition East Midlands and Aspire Gloucestershire will support around 500 young homeless people to find accommodation, education and employment. Ambition East Midlands covers Derbyshire and Leicestershire and is a newly formed partnership of three local charities P3, YMCA Derbyshire and the Y aiming to support 340 young people. Aspire covers Gloucestershire and is a partnership between CCP and P3 and will work with 150 young people.Whitni Thomas, Investor Relations Manager, Triodos Bank

“If we are going to use tax reliefs as a way to encourage investment to flow to certain parts of the economy, then let’s get money flowing where it can make the biggest difference to the most marginalised.”

Whitni Thomas, Investor Relations Manager, Triodos Bank

 

Over 15% of the investment raised through two fully subscribed Social Investment Bonds (SIBs) was provided by individual investors benefitting from the newly introduced social investment tax relief (SITR). SIBs work on a payment-by-results basis, so investors are only rewarded if a set of agreed social outcomes are met. If the outcomes are achieved, investors could make 7% returns every year for three years, equivalent to 19.3% per year with the benefit of the tax relief.

Dan Hird, head of Triodos Bank Corporate Finance, comments: “It is the first time that this advantageous tax relief is being used to get individual investors backing social impact bonds that can turn young people’s lives around.”

“We will now be able to give nearly 500 young people, who previously would have gone unsupported the chance to play a positive part in their communities and live fulfilling lives.”

Mark Simms, CEO, P3

Mark Simms, CEO at P3 said: “We passionately believe that these new services will fundamentally change the lives of young people around the country. However, with traditional methods of funding disappearing we had to look at new ways to find the finance that we needed to bring the project to life. We will now be able to give nearly 500 young people, who previously would have gone unsupported the chance to play a positive part in their communities and live fulfilling lives.”

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Ambition East Midlands and Aspire Gloucestershire were awarded payment by results agreements with the Department for Communities and Local Government and Cabinet Office after a nationwide competitive tender. The investors in each organisation will only receive their interest and capital payment if Ambition East Midlands and Aspire are successful in meeting their targets for housing and supporting vulnerable young people into education, employment and training. The capital raised enables the charities to deliver the programmes ahead of being able to claim for outcome payments.

Roger Ross, a Triodos Bank investor and committed social investor said “I have been making social investments for 20 years and I am delighted with the returns. Also it’s fantastic the way the market has grown, I love the tax breaks so now I’m switching all my remaining old style investments into social investments in order to make my funds benefit the whole community.”

I think public goods are worth paying for. So I don’t begrudge (much) paying my fair share of tax. If we are going to use tax reliefs as a way to encourage investment to flow to certain parts of the economy, then let’s get money flowing where it can make the biggest difference to the most marginalised. These two social impact bonds do exactly that and will help get nearly 500 young people off the streets and settled into accommodation they can sustain and on the right track to lead a fulfilling life. If it also means that investors can benefit from a discount on their tax bill, then it’s a real win-win for all of us.

Whitni Thomas, Investor Relations Manager, Triodos Bank

Find out more about Social Impact Bonds and how they are helping some of society’s most vulnerable people.

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