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11 February 2008
The Government wants to boost investment in disadvantaged areas
New measures to boost the amount of finance raised and channelled into new and expanding businesses in disadvantaged areas have been announced by the Government.
The changes are designed to strengthen the ability of community development finance institutions (CDFIs) to attract private investment. In turn, these organisations provide access to finance for enterprises in disadvantaged communities that have been turned down by mainstream providers like banks.
The new measures include the following.
- Regulations will relax the requirement for a CDFI to invest funds raised under the community investment tax relief (CITR) scheme for the fourth and subsequent years following accreditation, and allowing CDFIs that fail to meet these requirements to continue to be accredited, if the failure was outside their control.
- The range of financial instruments within the scheme will be increased, e.g. to include certain Shari'a compliant arrangements.
- The Finance Bill 2008 will amend the anti-avoidance rules which currently prevent banks from making CITR investments in CDFIs to which they provide banking services. The proposed clause will exclude, with retrospective effect, such deposits from these anti-avoidance rules.
