The use of tax incentives can play a key role in the growth of any sector.

The Government uses tax incentives to generate investment and growth in desirable industries such as renewable energy. It also encourages investment in small and medium size businesses using programmes such as the 'enterprise investment scheme'.

We are concerned that at present a large proportion of social enterprises do not benefit from any form of tax break. Charities benefit from a host of both income and investment tax breaks. Similarly investors in shares in some small and medium size enterprises (SMEs) are eligible for 'enterprise investment scheme' (EIS), income tax and capital gains relief and 'venture capital trust' (VCT) income tax relief. Many social enterprise investors, however, receive no tax breaks at all.

We believe that appropriate use of fiscal incentives could stimulate the growth of social enterprises by enhancing competitiveness, encouraging investment, and promoting innovation.

We are working with our partners to influence government to review the fiscal incentives for social enterprise including:

• tax breaks for investment in social enterprises;
• tax relief for those social enterprises that re-invest their profits for the benefit of the community; and
• tax relief for any business where more than 25% of the employees are disabled.

The Scottish Social Enterprise Coalition have published a short briefing on tax incentives for social enterprise, which can be found here.