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Accepting gifts of land, buildings or shares from your donors is a great way of raising funds and acquiring land or property for your charity. It's also very attractive to donors as they can claim generous tax relief.
This article is written for charities. There is no Income Tax or Corporation Tax relief for gifts of land, buildings and shares to Community Amateur Sports Clubs (CASCs) - although gifts to CASCs can qualify for relief from Capital Gains Tax.
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Giving something as an 'outright gift' to a charity means that someone donates something to you without expecting anything in return.
Your charity accepts the gift at its value on the date it is given to you. Your charity can keep it or sell it to realise funds.
Any individual or company can claim tax relief when they give (or sell for less than it is worth) UK land or property to charity, as long as they give up any interest in the land or property when they do so. For example, an individual couldn't live in a house they had given to charity and claim relief - they would still have an interest in it.
If your charity gives anything to the donor in exchange for, or in appreciation of, the gift then the value of the relief due to the donor decreases accordingly.
You need to give the owner a certificate to show that your charity has agreed to buy the land or property, or accept their gift. It needs to include:
A 'qualifying interest' means a freehold interest in land or a leasehold interest in land.
You need to keep a copy of this information for your records.
There are special rules that apply where property owned jointly between donors is given or sold to your charity for less than it's worth. If a donor owns property jointly, or in common, with one or more other people, relief will only be due if all of the joint owners dispose of the whole of their interest in the property to the charity at the same time. The relief allowed to each of them should be agreed upon by all of the owners.
The donor's relief could also be affected if, within a specified time after the gift has been made, the donor or their family becomes entitled to any interest or right in relation to all or part of the land or property again. In this case, relief may be withdrawn and tax may be recovered.
The time limits that apply are:
Your charity may want to seek professional advice before deciding whether to accept shares as a gift.
There are rules covering which type of shares qualify for relief. Find out more by following the link below.
If your charity gives anything to the donor in exchange for or in appreciation of the gift, the value of the relief due to the donor decreases accordingly.
You or the donor will need to arrange for ownership of the shares to be transferred to your charity. This can be done using a stockbroker, or you can do it yourself. You or the donor needs to complete a stock transfer form and attach the share documents and send them to the appropriate Stock Exchange Registrar.
After the shares have been transferred to your charity, and are registered in your name, you need to decide whether to keep them or sell them.
You can ask a donor who is giving shares to your charity to sell them on the charity's behalf. If you decide to do this, you need to put the request in writing to the donor so that they have a record when claiming tax relief. You need to make it clear that the donor gave the shares to your charity before selling them on your behalf, otherwise the donor might not get the tax relief.
For more help you can contact the Charities Helpline.