Don’t scrap CITR just when it’s needed most

Community Investment Tax Relief (CITR) was enacted in 2003 and became the first social enterprise tax relief in the UK.

Apart from the US’s New Markets Tax Credit scheme (which works differently), there is nothing similar anywhere else in the world. So it is a truly innovative and ground breaking financial instrument. Governments all over the world ask about it and are looking to create something similar in their own countries.

Trouble is, CITR was ahead of its time (but you have to start somewhere when nothing exists at all). Most community development finance institutions (CDFIs) were not investment ready back then and so they couldn’t use it properly. This, coupled with some design constraints, conspired to ensure that it didn’t realise its potential as quickly as some had expected.

Now it is critical that the sector raises private finance as public funding cuts begin to bite hard. We could never have foreseen the financial crisis when we developed CITR, yet it is in place and can support the new world order that we are all facing. Don’t get rid of it now.

I’ve written an open letter to Michael Jack, chair of the the Office for Tax Simplification, following the findings of its report, which recommends that CITR be scrapped.