The Treasury and the Department for Business, Innovation and Skills (BIS) have issued a consultation on the government's plan to introduce a new tax incentive to encourage private investment in social enterprise from 2014.

The consultation is out for comment until 6 September 2013.

The aim of this new tax relief is encourage private investment in social enterprise; the consultation covers investees, including Community Interest Companies (CICs), Community Benefit Societies (Bencoms) and charities; the types of investment eligible for the relief; and the tax reliefs themselves.

To qualify for the relief, the same investment cannot qualify for tax reliefs under Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS); the original investment or principal is not secured against assets or subject to guarantee; the holders of the investment do not have preferential rights to assets on winding-up of the social enterprise, compared to other holders of the same type of investment; and returns on the investment should be payable at a broadly commercial rate.

The plan is to offer income tax relief on qualifying investments to be calculated as a percentage of the amount of the qualifying investments made, and will be relieved in terms of a deduction from income tax liability. The rate of the income tax relief will be set out at Budget 2014. There will also be a capital gains tax reinvestment relief. The tax reliefs can only be claimed when an individual is not connected with the qualifying social enterprise.

The consultation closes on 6 September and is available HERE