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Community Investment Tax Relief (CITR)CITR is a tax relief given to individuals and companies that invest in accredited Community Development Finance Institutions (CDFIs). The relief is not available (or is reduced) where the CDFI makes payments, or other returns of value, to the investor within a specified six year period, unless the payments are qualifying payments. This anti-avoidance provision is widely drawn and currently deposits by the CDFI in a bank are not treated as qualifying payments. Consequently, if a CDFI made a deposit with a bank, this would reduce the amount of CITR available to the bank for any investment it made in the CDFI. Legislation will be introduced in Finance Bill 2008 to ensure that any deposits from the CDFI to a bank that are made in the ordinary course of its banking arrangements will not reduce the amount of CITR available to the bank in respect of its investment. The change will be treated as always having had effect.
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