Clause 71 and schedule 25 will make changes to the community investment tax relief. The changes will provide greater flexibility for claimants of the reliefs and limit the relief for corporate investors in the scheme to ensure that the scheme is compatible with the de minimis limits for state aid. The relief plays an important role in bringing investment into businesses in disadvantaged areas, and has done for more than 10 years now.

Let me briefly provide hon. Members with some background to the clause and schedule. The tax relief for investment is currently restricted to a relief equivalent to 5% of the amount invested, which is allowed over a period of five years to give a total relief of 25%. There is no provision to allow unused relief to be claimed in any other period. The scheme was an approved state aid, but the approval expired in October 2012.

Following discussions with the European Commission, it was agreed that the scheme could be brought within the de minimis limit of €200,000 in any three-year period. The scheme remains a state aid, but not a notifiable one, as long as the limits are adhered to. It will affect only corporate investors; state aid rules do not apply here to individual investors.

The changes made by schedule 25 will allow an investor to carry forward and use in later years any unused relief within the overall five-year period. That will provide flexibility for investors to ensure that they obtain the maximum relief available. Individual investors might not be greatly affected, but corporate investors in difficult economic circumstances will welcome the opportunity created.

Further changes will restrict the overall amount of tax relief for corporate investors to the de minimis limit previously stated. Although that appears to be a substantial restriction, it is not anticipated that it will greatly affect corporate investors, who mainly invest by way of loans. To calculate the relief given, corporate investors will compare their interest return and tax relief obtained with the commercial rate to which they would have lent to community development finance institutions. HMRC has issued draft guidance to explain the calculation and will issue full guidance pending the successful passage of the Bill. Fewer than 10 corporate investors are potentially affected by the change.

I was asked how many CDFIs the 10 companies have invested in, but I cannot answer that question because HMRC does not track what individual investments the companies make. The question is fair, but the hon. Lady will understand why it is not possible to answer it. It is not expected that the changes will significantly alter the level of investment, and they are likely to have an impact on only a small number of companies.

I was also asked what more could be done to encourage investors to use this relief. It is right to say that it has not been as well used as was the intention when it was introduced in 2002. We think that the changes that we are making will help to make the scheme more appealing. It is well established, so I am not sure that a lack of awareness is a problem affecting the take-up of community investment tax relief, which has been in place for 11 years. None the less, the measures represent a constructive change to the current regime, and I welcome the hon. Lady’s support for them.