Giving land/buildings or shares/securities to charity

Capital Gains tax relief

If you give assets (other than money) to UK charities and you make an outright gift of the asset, the disposal is treated as being at such a price that there is neither a chargeable gain nor an allowable loss.

If the charity pays you for the asset but the amount paid is less than you originally bought the asset for then that disposal is also treated as being at such a price that there is neither a chargeable gain nor an allowable loss.

However, if the charity buys the asset for more than you originally paid for it then you should calculate th capital gain on the basis of the amount the charity actually pays you.

Income tax/Corporation tax relief

You may also be entitled to income tax or corporation tax relief if the assets you gift or sell (at less than market value) to charity are qualifying investments.

The relief available for outright gifts is the market value of that asset at the date of transfer. If you sell the asset to the charity at less than its market value then the relief available is the difference between the open market value and the price paid by the charity (plus any incidental costs)

Qualifying investments

The following conditions must be met for income or corporation tax relief to apply:

  • Any shares or securities must be quoted or listed on a recognised stock exchange.
  • A limited company cannot get relief for the gift of its own shares to charity.
  • Land or buildings must be in the UK and you cannot retain any rights over the property. (eg if you give land to a charity but retain a right of access over the land this gift will not qualify, nor will a gift of a building where you retain a right of occupancy).
  • The valuation that is used for taxation purposes must be the market value of that asset on the date ownership changes hands (eg for shares the average value on the stock exchange on the date of transfer).

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Tax advantages for you

  • Gifts of land, buildings, shares or securities to a UK charity are treated as a no gain/no loss transaction for capital gains tax purposes.
  • For certain qualifying gifts/sales you can also claim income tax relief equal to the net value of the land or shares to the charity on the date of the gift or sale.
  • You get the income/corporation tax relief at your highest rate of tax but the relief can only be claimed for the year in which the gift was made.
  • If your chosen charity asks you to sell the land or shares on their behalf you can still claim this relief as long as you keep proper records of the gift and the charity’s request (eg an exchange of correspondence in which the charity accepts your gift but asks you to sell on their behalf and pass the proceeds to them along with transfer documents and remittance to the charity of all or the agreed proportion of the sale proceeds).
  • Outright gifts and bequests to charity are completely free of inheritance tax.

Tax advantages for the charity

  • The charity will receive your gift at its value on the date of transfer.
  • Charities do not have to pay Stamp Duty Land Tax on receipt of outright gifts of land or buildings.
  • Outright gifts of shares to a charity will not generate a stamp duty charge.

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How to claim tax relief

If you make a Self Assessment Return complete section 15 to claim relief and if appropriate request a reduction in your Self Assessment payment on account.

If you pay tax through PAYE (employees and occupational pensioners) write to your Tax office and ask for an amendment to your tax code for the current year.

If you have already made a gift of land or buildings you can ask for confirmation of the value at the date of transfer from the Valuation Office Agency.

Records you need to keep

  • Keep the share transfer document for any gift/sale of shares.
  • If you give/sell land or buildings to a charity you should get a certificate from the charity describing the land/buildings transferred, giving the date of the gift and confirming that the charity has acquired the qualifying interest in the land/building(s).
  • If you have been asked by a charity to sell land or shares on its behalf you need to ask for that request in writing and keep it to support your claim for tax relief.