Social impact investment

The intentional placing of new capital in businesses and funds that seek financial return alongside a measurable positive, social and/or environmental impact
BpH Wealth Partner, Simon Brown has been involved in a new Social Investment Academy from the outset.

The Social Investment Academy had its inaugural meeting on 26 March 2013 in association with the financial services regulator, HM Treasury, Big Society Capital and the City of London Corporation. Its aim is to promote ways to invest by balancing financial reward with achieving positive social outcomes.

Following that, Simon was asked to participate in a consultation at the Treasury to help shape the tax relief available on social impact investments.

What is Social Impact Investment?

Social Impact Investment is about trading off part of the financial return you might expect from a more traditional investment in order to help make an impact in areas you feel strongly about. Schemes already operate across virtually every area of society including:

  • Prisoner reform and rehabilitation
  • Social housing
  • Mental health
  • Keeping children out of care.
What it is not

Social Impact Investment is not Socially Responsible Investment (SRI) or Ethical Investment. Both are focused on avoiding certain investments and using shareholder advocacy to influence good corporate strategy in public listed companies.

How to think about Social Impact investment

Traditionally investment has been about return rather than impact. An impact can be achieved separately through charitable or philanthropic giving. Social Impact Investment (SII) can fulfil both requirements achieving a return and making an impact without giving money away. Due to the commercial nature SII is more about empowering people to achieve better and enduring outcomes rather than just giving.

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime

Government support

The UK Government has gradually paved the way to make sure there are no unnecessary regulatory hurdles preventing the growth and success of the Social Impact Investment sector. David Cameron is on record as stating that the UK should lead the world in this area and then seek to export our expertise.

Tax relief

One of the announcements in the latest budget was to introduce Tax Relief on Social Impact Investment, with Income Tax and Capital Gains Tax reliefs providing a substantial incentive for investors.

Individuals making an eligible investment will be able to deduct 30% of the cost of their investment from their income tax liability in the relevant tax year in which the investment is made. The minimum period of investment is three years.

If individuals have chargeable gains in 2014/15 (or a later year) they can also defer their Capital Gains Tax (CGT) liability if they invest their gain in a qualifying Social Investment. Tax will instead be payable when the Social Investment is sold or redeemed. No CGT is paid on any gain on the investment itself, but income tax must be paid in the normal way on any dividends or interest on the investment.

If the Social Impact Investment qualifies for Business Property Relief then it falls outside the estate for IHT purposes, which provided the opportunity of passing on some of your social values to your heirs.


Any social enterprises looking to access funding must have a defined and regulated social purpose and will need to apply to HMRC after July 2014 when the Finance Bill has been passed, to confirm they meet the requirements of the scheme.


Under EU rules governing the initial introduction of the social investment tax relief, the limit of government subsidised investment available to social enterprises is €344,827, equivalent to about £290,000 depending on the exchange rate on the day of the investment.

Individual investors can invest up to £1,000,000 and can invest in more than one social enterprise. This is independent of any investments under the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme which are subject to their own annual investment limits.

For more information, please contact Simon Brown: or call 01582 461122