5.1.1 Since 6 April 2000 individuals and companies have been able to claim income or Corporation Tax relief on gifts to charity of certain shares, securities and other investments. The relief was extended from 6 April 2002 to include gifts of land or buildings. This relief is available in addition to the relief from Capital Gains Tax on gifts to charity for individuals and the relief from Corporation Tax on gains for gifts to charity by companies. There is a Self Assessment helpsheet that gives details of the capital gains reliefs for individuals, Helpsheet HS295 Relief for gifts and similar transactions.
5.2.1 You can claim if you give, or sell at less than market value, any qualifying investments to a UK charity.
5.2.2 Because this tax relief has been targeted by marketed tax avoidance schemes, some anti-avoidance provisions have been introduced. A genuine donor who has qualifying investments that they want to donate to charity should have no concerns about these provisions. However where a donor has acquired a qualifying investment in the four years before their donation as part of a scheme or arrangement and:
The relief will be restricted. There are more details on this in paragraph 5.9.3.
5.3.1 The following categories of investment qualify for the relief:
More information on recognised stock exchanges is shown at paragraph 5.20 below.
5.4.1 If you are not sure whether an investment will qualify, you can contact us at the following address:
HMRC Charities
St John's House
Merton Road
Bootle
Liverpool
L75 1BB
You can contact us on Tel 0845 3020203 between 8.30 am and 5.00 pm (select option 3) or by email.
5.5.1 You should first contact the charity you have selected to ensure that it can accept the proposed gift. If it agrees, you then need to sign a transfer form to take the shares out of your name and put them into the name of the charity. You can get a transfer form by contacting the registrars of the company. Their details will be on your share certificate and on your dividend vouchers. The registrars will be able to answer any questions about filling in the form.
5.5.2 Your chosen charity may also be able to help you with the transfer procedure.
5.6.1 The gift can be made to any approved charity and you will need to contact the charity to ensure it can accept the proposed gift. Once the charity has confirmed it can accept the gift the property can be transferred to it.
5.6.2 To claim the relief you will need to obtain a certificate from the charity. The certificate must contain the following:
5.6.3 There is no prescribed certificate for this purpose and the charity can determine the form its certificate takes.
5.7.1 No, you must give the whole of your beneficial interest in the property. 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 if any of them are to claim relief.
5.8.1 No, you would not be able to claim the relief under such an arrangement, as you would not have given away the whole of your beneficial interest in the property.
5.9.1 An individual donor should deduct the relief when they calculate their income for the tax year in which they make the gift. A tax year runs from 6 April in one year to 5 April in the next.
5.9.2 Companies are allowed deductions from profits for the accounting period in which they make the gift. The maximum deduction is that which reduces the profits for the accounting period to nil.
5.9.3 For an outright gift, the amount you can deduct is:
5.9.4 For a sale at undervalue, the amount you can deduct is:
* For disposals prior to 15 December 2009 the value of the net benefit to the charity is the market value of the investment less any related liabilities (see paragraph 5.9.6 below). Since 15 December 2009 the value of the net benefit to the charity is the &'relevant value' of the qualifying investment less any related liabilities (see paragraph 5.9.6). The relevant value will normally be the market value of the qualifying investment however if the asset, or any asset from which the donated asset derives, was acquired by the person donating it, less than four years before the disposal:
The relevant value is the lower of market value or acquisition value (see paragraph 5.9.5 and example 5).
5.9.5 The acquisition value for an asset which is donated in the same form as it was acquired is the cost to the donor less any amount the donor, or a person connected with the donor, receives as part of the scheme they are involved with.
Where the qualifying asset donated is derived from a different asset that was acquired as part of a scheme, the acquisition value of the qualifying asset is a just and reasonable proportion of the cost to the donor of the original asset less any amount the donor, or a person connected with him, receives as part of the scheme they are involved with.
5.9.6 In addition, if the charity is, or becomes, subject to an obligation such that:
5.9.7 Some examples are given below:
Angela owns 5,000 shares in ABC plc, a company quoted on the London Stock Exchange. The shares are given to a charity when they are worth £10 each. A broker's fee of £50 is charged for handling the transaction. As a token of gratitude the charity gives the donor tickets to an event worth £500.
The deduction that the donor can make is:
John owns 1,000 shares in XYZ plc, a company quoted on the London Stock Exchange. The shares are valued at £4.50 each. He would like to give the shares to a charity, but needs to realise some money from them. So, he agrees to sell them to the charity for £2 each. As a token of gratitude the charity gives him a book worth £25.
The deduction that the John can make is:
George has owned a second property for some years and decides he will give it to a local charity he supports.
A qualified property agent values the property at £90,000 and
he is charged £400 for the valuation and other legal fees. The charity
is grateful and gives George a painting worth £1,000.
The deduction that George can make is:
Roger owns and gifts gilts with a market value of £10,000 to a charity and receives in return a free ticket to a concert worth £30. The charity is under an obligation, for which it received a payment of £750, to sell any gilts it receives to a third party (not connected to Roger) at 10 per cent of their market value. The charity sells the gilts to the third party for £1,000, so the net benefit to the charity from the receipt of the qualifying investment is £1,000.
| Deductions/additions | Amount £ |
|---|---|
| The deduction Roger can make is the market value of the gilt | £10,000 |
| Less the market value of the charity's liability under the obligation to sell the gilts at 10 per cent of their market value (market value £10,000 less proceeds £1,000) |
£9,000 |
| (the net benefit to the charity) | £1,000 |
| Less the value of the benefit received | £30 |
| Total | £970 |
Mr Jones enters into an agreement with company X, which sells tax avoidance schemes, to buy £200,000 of shares in a FTSE 100 company from company X for £30,000. The shares come with an option attached for company X to buy them back after three years for £1.
Two days after purchasing the shares Mr Jones donates them to charity B and makes a claim for relief of £200,000. He claims that the fact that the option to buy back the shares exists is not taken into account in valuing the shares because the option is a contingent liability which is ignored.
Because the shares were acquired as part of a scheme or arrangement less than four years before they were gifted to charity B and the reason Mr Jones purchased them was so that he could donate them to charity and claim the relief, his relief is restricted to the lower of market value or acquisition cost. Therefore, Mr Jones is only entitled to relief of £30,000.
5.10.1 You can claim relief by:
5.10.2 If you are not sent a tax return at the end of the tax year, or if you want to claim relief before the end of the current tax year, you should write to your tax office, giving full details of the gift, in order to claim the relief.
5.10.3 Companies should include the amount of relief they are claiming in the 'Charges Paid' box on their Corporation Tax Self Assessment (CTSA) Return.
5.11.1 You will need some evidence of the transfer of ownership of the qualifying investments. In the case of a gift of property, you will need to obtain from the charity the sort of certificate mentioned above. For a gift of shares, evidence will take the form of a dated copy of the transfer form or some other dated document irrevocably giving the qualifying investments to the charity.
5.11.2 This is important because the shares will come out of your name on the company's register at a later date, by which time the value of the shares may have changed. You may also continue to receive communications, including dividends, from the company until the transfer has been registered.
5.12.1 The date on which the qualifying investments are transferred to the charity. In the case of shares and securities, this is likely to be the date that you sign and hand over the stock transfer document. For gifts of land you should take the date on which you disposed of your beneficial interest in the land. Normally this will be the date on which you conveyed the property to the charity. However, if the disposal was made under a contract, perhaps a sale at below market value, you should take the date on which the contract was made. If the contract was conditional take the date on which the conditions were all satisfied. If the gift was made by a declaration of trust you should take that date. If you have granted a lease to a charity you should take the date you granted the lease.
5.13.1 'Market value' means the price that the investments might reasonably be expected to sell for in the open market.
5.13.2 There are different rules for establishing the market value of shares and securities. Some basic rules are explained at paragraph 5.21 below.
5.13.3 For gifts of real property, you need to determine the market value of the property on the date you wish to gift the property to charity. Generally you will need to obtain professional advice as to the market value. The incidental costs of this advice may be added to the market value if they relate to the valuation of the property for that particular gift.
5.14.1 If you have made a gift of land to charity you may want to obtain confirmation from us that we agree the value of your gift before you claim relief in your Self Assessment or CTSA Return. As long as you have a valuation of the land at the time you made the gift we can check that valuation for you.
5.14.2 This service is only available for checking your valuation. We are not able to provide valuations of your property. We can only check your valuation after you have made a gift, not before.
5.15.1 If you contact the charity about making a gift of shares and securities and the charity asks you to sell them on its behalf, you can do so. However, you will need satisfactory evidence (such as an exchange of letters) to show that you have made the gift of the investment to the charity and that the charity asked you to dispose of the investments on its behalf. Otherwise, you may be treated as having made a disposal on your own account and the cash you give to the charity may be treated as a Gift Aid donation. This may also incur a Capital Gains Tax charge.
5.15.2 Once the company registrar has received the stock transfer form and ownership has been transferred, you can no longer dispose of the shares for the charity.
5.16.1 The amount of Capital Gains Tax or Corporation Tax that you would have paid if you sold the shares or property, rather than given them to a charity will depend on a number of factors. Please see our Introduction to Capital Gains Tax for further details.
5.17.1 For companies, relief for cash gifts is given in the same way as relief for gifts of qualifying investments and in most cases the relief will be the same whichever method of donating you choose.
5.17.2 If you are an individual, it depends on your circumstances and whether you wish the charity or yourself to gain the greater benefit from the tax relief. A charity can claim Gift Aid on a qualifying gift of money but cannot make any claims in respect of the gift of an asset.
5.17.3 Generally, giving the shares to charity will be simpler, both in terms of the paperwork on the disposal and in completing your tax return, than selling the shares yourself and giving the cash to the charity.
5.18.1 You can give your shares to ShareGift, an independent charity share donation scheme. The scheme accepts gifts of small numbers of shares, aggregates them and donates the sale proceeds to a number of registered charities. ShareGift can also facilitate larger share donations to specific charities.
5.18.2 For further information, please contact:
ShareGift
17 Carlton House Terrace
London
SW1Y 5AH
Tel 020 7930 3737
ShareGift
website (Opens new window))
(Registered charity number 1052686)
5.19.1 Outright gifts and bequests to charity are completely free of Inheritance Tax.
5.19.2 You are not liable to Capital Gains Tax or Corporation Tax on capital gains when you make a gift of assets, such as land or stocks and shares, to charity. For further information see our Capital Gains Tax section.
5.19.3 Charities do not need to pay stamp duty on acquisitions of land or buildings. Further information on this can be obtained from the Stamp Taxes Helpline on Tel 0845 603 0135.
5.20.1 The definition of a 'Recognised Stock Exchange' (RSE) is given in Section 1005 Income Tax Act 2007 (ITA). It includes the London Stock Exchange and the Plus Listed Market in the UK and any Stock Exchange outside the UK designated as an RSE by an order made by the Commissioner of HM Revenue & Customs (HMRC).
5.20.2 Recognition under Section 1005 ITA is for tax purposes only and does not imply recognition or approval for regulatory or other purposes.
5.20.3 An up to date list and further information can be found on the HMRC website.
5.21.1 Shares or securities quoted in the London Stock Exchange Daily Official List.
You should use either:
5.21.2 Bargains at special prices are clearly shown in the Daily Official List. They should not be included in the comparison of highest and lowest prices. Bargains at special prices are now very rare.
5.21.3 For other shares or securities listed or dealt in on a recognised stock exchange, there is no special formula for valuing these. Their market value is 'the price which those assets might reasonably be expected to fetch on a sale in the open market'.
5.21.4 Where shares are quoted on an overseas stock exchange it will normally be acceptable to take the value as the price quoted on that exchange for the day of the gift, translated into sterling at the rate of exchange for that day.
5.21.5 Prices for these shares and securities and those quoted in the London Stock Exchange Daily Official List are often published in the financial pages of newspapers. The newspaper valuations may be used where the parcel of shares is modest.
5.21.6 You should use the 'selling price' (also called the 'bid price' - the price at which units are sold by investors) published by the unit trust manager for the day in question. The 'selling price' is usually given in the financial pages of newspapers under 'authorised investment funds'. If no price was published for the day in question you should use the last price published before that day.
5.21.7 You should use the published price for the day in question. This can usually be found in the financial pages of newspapers under 'authorised investment funds'. If no price was published for the day in question you should use the last price published before that day.
5.21.8 You should use the published price for the day in question. This can usually be found in the financial pages of newspapers under 'offshore or overseas funds'. If no price was published for the day in question you should use the last price published before that day or contact the fund manager.
5.22.1 A qualifying interest in land means:
5.22.2 An agreement to acquire a freehold interest and an agreement for a lease are not qualifying interests in land.
5.22.3 In Scotland, references to 'a freehold interest in land' mean the interest of the owner, and references to 'a leasehold interest in land, which is for a term of years absolute' mean a tenant's right over or interest in property subject to a lease.
5.22.4 To qualify for this relief you must dispose of the whole of your beneficial interest in the land in question to the charity.
5.22.5 If you grant a lease to a charity either rent-free or below market rent you will not have disposed of the whole of your beneficial interest in the property if you retain the freehold reversion or a head-lease. However, if you grant such a lease you will be treated, for the purposes of this relief, as having disposed of the whole of your beneficial interest.
5.22.6 A person may dispose of the whole of their beneficial interest in land together with any easement, servitude, right or privilege, so far as they benefit that land. For the purposes of this relief, the disposal of the easement etc is treated as the disposal by that person of the whole of his beneficial interest in a qualifying interest in land.
5.22.7 If you own a qualifying interest in land jointly, or in common, with one or more other people, relief will only be due if all of you dispose of the whole of your beneficial interest in that land to the charity. If you give property to charity in this way the relief to be allowed to each of you should be agreed upon by all of you.
5.22.8 There are special rules to prevent this relief being used for
tax avoidance purposes. In certain circumstances all entitlement to relief
can be withdrawn and any tax due can be recovered by assessment. In broad
terms, the circumstances in which this will be done are where, within
a specified period, you, or a person (including a company) connected with
you, becomes entitled to any interest or right in relation to all or part
of the land. This does not apply if that person acquires that interest
or right for full consideration or as a result of a disposition of property
on death.
5.22.9 The specified period is:
