In this section:
- Gifts to charity of money by sole traders or partnerships
- Gifts to charity made by companies
- Gifts to charity of land, buildings or shares by companies
- Gifts to charity of company equipment, trading stock or staff help
- Sponsoring a charity
- Payroll Giving: introduction for employers and pension providers
Gifts to charity of land, buildings or shares by companies
Your company could benefit from Corporation Tax relief if it gives land, property or qualifying shares to a UK 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 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.
On this page:
- Corporation Tax relief
- Capital Gains
- How to give land, buildings or shares to a charity
- Working out the tax relief the company can claim
- Tax advantages for the charity
- How to claim tax relief
- Records you'll need to keep
- Contacting the HMRC Charities Helpline
- More useful links
Corporation Tax relief
Your company can get relief from Corporation Tax at its highest rate on gifts (or sales below market value) to charity of:
- shares or securities which are listed on any recognised stock exchange. This includes London and PLUS-listed in the UK and any recognised overseas stock exchange
- shares or securities dealt in on any designated market in the UK. The only markets so designated currently are the Alternative Investment Market (AIM) of the London Stock Exchange and the PLUS-quoted market of PLUS Markets
- units in an Authorised Unit Trust (AUT)
- shares in a UK Open-Ended Investment Company (OEIC)
- holdings in certain foreign collective investment schemes - generally schemes set up outside the UK that are similar to AUTs and OEICs
- a qualifying interest in land
Your company can’t get relief for gifts of its own shares.
Note that Corporation Tax relief is not available if you are giving land, property or shares to a Community Amateur Sports Club (CASC).
Find out which stock exchanges are recognised
Capital Gains
Corporation Tax is normally payable on capital gains made when land, buildings or shares - or any other 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 UK charity or CASC, there is no Corporation Tax to pay on any capital gains. This is because, when the gift is made, its value is treated by HM Revenue & Customs (HMRC) as making no gain or loss for capital gains purposes.
What if the charity pays for the asset?
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.
Find out more about Capital Gains and how to work out if a gain is chargeable
How to give land, buildings or shares to a charity
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:
- take the shares out of your company name
- put them into the charity's name
If you want to get Corporation Tax relief for giving land or property you must obtain a certificate from the charity.
This must contain the following:
- a description of the qualifying interest in land or property that has been given or sold to the charity
- the date of the disposal
- a statement confirming that the charity has acquired the qualifying interest in the land or property
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 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.
Working out the tax relief the company can claim
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.
Tax relief on a gift
To work out the amount of Corporation Tax relief for a gift to a charity, 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.
Tax relief on a sale at less than market value
To work out the amount of Corporation Tax relief when a company sells an asset to a charity at less than market value, 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.
Market value
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 can also be different rules if the charity has to do something in return for receiving the asset.
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.
Tax advantages for the charity
If your company gives assets like shares or property to a UK charity, there are several tax advantages for the charity:
- it receives your company's gift at its value on the date the transfer of ownership takes place
- it won't have to pay Stamp Duty Land Tax if your company makes an outright gift of land or buildings
- there won't be a Stamp Duty charge if your company makes an outright gift of shares
How to claim tax relief
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 '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.
Check the value of a property on the Valuation Office Agency website
Find out how to complete a Company Tax Return
Records you'll need to keep
If your company gives shares, securities, land or buildings to a UK charity you'll need to keep certain records to show you're entitled to Corporation Tax relief.
Gifts of shares
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.
Gifts of property
If your company gives or sells land or buildings to a charity you'll need to get a certificate from the charity showing:
- a description of the land or buildings that are being transferred to the charity
- the date your company made the gift
- confirmation that the charity has taken over ownership of the property
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.
Selling the asset for the charity
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:
- the charity accepting your company's gift and asking you to sell it on their behalf
- the charity requesting that your company passes the sale proceeds to them at the same time as sending the transfer documents
- your company giving either all, or the agreed proportion of, the sale proceeds to the charity
How long you should keep records
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.
Contacting the HMRC Charities Helpline
For more help you can contact the Charities Helpline on Tel 0845 302 0203 (open from 8.00 am to 5.00 pm, Monday to Friday).
More useful links
Read about gifts to charity made by companies
Find out about gifts to charity of company equipment, trading stock or staff help
