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Your company could benefit from Corporation Tax relief if it gives land, property or qualifying shares to a charity, or sells them to a charity at less than their market value.
There is no Corporation Tax relief for gifts or sales of land, buildings or shares to Community Amateur Sports Clubs (CASCs). Although gifts or sales at less than market value to CASCs can qualify for relief from Corporation Tax on capital gains.
This guide explains how your company can qualify for this relief, how to claim it, and what records you should keep.
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Your company can get relief from Corporation Tax at its highest rate on gifts or sales below market value to charity of:
Your company can't get relief for gifts of its own shares.
Corporation Tax is normally payable on capital gains made when land, buildings, shares (or any asset other than money) is given away or sold at a profit.
If your company makes an outright gift, something given without expecting anything back in return, of an asset to a charity or CASC, there is no Corporation Tax to pay on any capital gains. This is because, when the gift is made, the transaction is treated as having taken place for an amount that results in no gain and no loss for the donor company.
As long as the charity or CASC pays your company no more than you originally paid for the asset, there's no Corporation Tax to pay because there is no chargeable gain.
But if the charity or CASC buys the asset for more than your company originally paid for it, your company may have to pay Corporation Tax on the gain. You work out the chargeable gain based on the amount that the charity actually pays your company.
First you need to contact your chosen charity to make sure it can accept your gift.
If you want to give shares you need to complete a stock transfer form to:
If you want to get Corporation Tax relief for giving land or property you must obtain a certificate from the charity which must contain the following details:
There is no prescribed form for the charity's certificate. A letter confirming the required details is acceptable.
A 'qualifying interest' means a freehold interest in land or a leasehold interest in land.
You must transfer the whole of your interest in that land or property to the charity. For example, you can't give your property to charity and allow an employee to continue to live in it. In the situation where two or more persons hold the property, all of the joint owners must dispose of their interest in the property to the charity at the same time if any of them are to claim relief.
A charity might ask you to sell the shares or land you propose to give on their behalf. You will need to keep evidence, (such as an exchange of letters to show that you've made the gift and the charity has accepted it) before you dispose of the asset - otherwise you might have to pay Capital Gains Tax.
The way you work out the amount of relief due is different depending on whether your company gives land, buildings or shares to a charity, or sells them to charity at less than their market value.
You can work out the amount that can be deducted from your Corporation Tax profit as a gift to a charity as follows. Add together the market value of the asset and any costs like legal fees, then take away any money or other benefits the company (or anybody connected with the company) gets for giving the asset to the charity.
There are anti-avoidance provisions and these are set out in the Detailed Guidance.
You can work out the amount that can be deducted from your Corporation Tax profit when your company sells an asset to a charity at less than market value as follows. Add together the market value of the asset you're selling and any costs like legal fees, then take away the amount you sell the asset for. After that take away any money or other benefits the company (or anybody connected with the company) gets for selling the asset to the charity.
If your company has given or sold land or property to a charity, the Corporation Tax relief could be affected if the company again became entitled to any interest or right in relation to all or part of the land or property. There are special rules covering this.
The market value is the price that the asset might reasonably be expected to sell for in an open market.
If your company is giving or selling land or property you should value it on the date you transfer it to the charity. It's likely that you'll need to engage a professional adviser to work out the market value. You can add those costs to the market value when you work out your tax relief.
There are different rules for working out the market value of shares and securities or other investments. There are also different rules for calculating the relief if the charity has to do something in return for receiving the asset or if the company acquired the asset for the purpose of donating it to charity.
To find out more about working out the value of the tax relief, see the 'More useful links' section for a link to the detailed guidance notes.
If your company gives assets like shares or property to a charity, there are several tax consequences for the charity:
Your company claims the tax relief in the accounting period during which it made the gift to the charity. You deduct the amount of the relief from the company's Corporation Tax profits for the period. You include the amount your company is claiming in the box headed 'Charges paid' box on your Company Tax Return.
If you've already made a gift of land or buildings and you need to check the value on the date the property was transferred, you can contact the Valuation Office Agency. They'll be able to confirm the valuation for you.
If your company gives shares, securities, land or buildings to a charity you'll need to keep certain records to show you're entitled to Corporation Tax relief.
You'll need to keep a dated copy of the share transfer document if your company gives or sells shares to a charity. Some other dated document that binds the company to transferring the shares to the charity would also be acceptable as an alternative.
If your company gives or sells land or buildings to a charity you'll need to get a certificate from the charity showing:
There's no particular form that the charity needs to use for this certificate. It can draw up the document itself as long as it contains the required details.
If the charity asks your company to sell a gift of land or shares for them, you can still claim the relief, but you'll need to keep proper records of the gift and of the charity's request. For example, this might be correspondence showing:
You must keep your tax records for at least six years after the end of the accounting period to which they relate. If HMRC makes any enquiries about your company tax return you will need to keep the records until the enquiries are completed.
For more help you can contact the Charities Helpline.