A rarely used UK tax relief is back in the spotlight, offering investors a way to combine financial returns with real-world impact.
The scheme – known as Community Investment Tax Relief (CITR) – is being used in a new community share offer from ICOF Community Capital, a lender that supports co-operatives and community businesses across the UK.
What is CITR – and why does it matter?
CITR was introduced by the UK government to encourage investment into underserved communities, but it has remained largely under the radar.
It allows eligible investors to claim 25% income tax relief on what they invest, spread over five years.
That means:
- A £10,000 investment could generate £2,500 in tax relief
- Paid as £500 per year over five years
- On top of any returns from the investment itself
Despite this, CITR has been used far less than other tax wrappers like ISAs or pensions – making opportunities like this relatively rare.
How the ICOF Community Capital offer works
The new share offer from ICOF Community Capital pays a headline rate of three per cent, but with a twist: returns are paid in additional shares rather than cash.
On its own, that might not turn heads. But when combined with CITR, the overall return profile looks more compelling.
For eligible taxpayers, the combination of interest and tax relief is roughly equivalent to an eight per cent annual return. ICOF uses investor funds to provide loans to worker-owned co-operatives, community-owned businesses, and renewable energy projects.
These are areas that often struggle to access traditional finance, meaning your money is directly supporting local economies and community ownership.
A different kind of tax-efficient investing
At a time when many investors are looking beyond traditional stocks and shares, CITR offers something different.
And it’s not just about tax efficiency, it’s about where your money goes.
Community share offers like this can support businesses rooted in local communities, back more democratic ownership models and help fund sectors like clean energy and social enterprise
There may also be inheritance tax advantages, depending on individual circumstances – although, as always, tax treatment depends on your situation and could change.
What to watch out for
As with any investment, this isn’t risk-free. Returns are not guaranteed, shares are typically illiquid (harder to sell) and tax relief depends on eligibility and personal circumstances.
It’s important to see this as a long-term, higher-risk investment, and to seek independent advice if you’re unsure.
Could this be a turning point for CITR?
If successful, this offer could help revive interest in CITR more broadly.
For years, the scheme has been overlooked – but as more investors look to align their money with their values, it could start to play a bigger role.
