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If you give land, property or qualifying shares to a charity, or sell them to a charity at less than their market value, you can claim Income Tax relief and lower your tax bill, as well as getting Capital Gains Tax relief.
There is no Income Tax relief for gifts or sales of land, buildings and shares to Community Amateur Sports Clubs (CASCs), although gifts or sales to CASCs can qualify for relief from Capital Gains Tax.
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You can claim Income Tax relief on gifts (or sales below market value) to charity of:
Note that Income Tax relief is not available if you are giving land, property or shares to a CASC.
Capital Gains Tax is normally payable when land, buildings or shares - or any other asset other than money - is given away or sold at a profit.
However you’ll get relief from Capital Gains Tax when you:
When you give an asset away to a charity or CASC, or sell it to a charity or CASC for less than it cost you, you're treated as making no gain or loss for Capital Gains Tax purposes, so you won’t have to pay any Capital Gains Tax.
If you sell an asset to a charity or CASC for less than its market value but more than you originally paid for it, you should calculate the capital gain on the basis of the amount the charity actually pays you. You will only pay Capital Gains Tax if the selling price is more than the allowable costs.
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 Income Tax relief for giving land or property you must obtain a certificate from the charity. This must contain the following:
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.
The way you work out Income Tax relief is different depending on whether you give land, buildings or shares to a charity or sell them to charity at less than their market value.
To work out the amount of Income Tax relief you'll get for making a gift to a charity, add together the market value of the asset you're giving and any costs like legal fees. Then take away any money or other benefits you (or anybody connected with you) get for giving the asset to the charity.
To work out the amount of Income Tax relief you'll get when you sell 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 you (or anybody connected with you) get for selling the asset to the charity.
In both cases you work out the amount of Income Tax relief you can get by deducting what's left from your total income, but not gains, for the tax year you make the gift. A tax year runs from 6 April one year to 5 April in the next. You can't carry the relief forward or backwards to any other tax year.
If you have given land or property to a charity your Income Tax relief could be affected if you again become 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 you're 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 asset was acquired for the purposes of donating it to charity.
To find out more about working out the value of Income Tax relief see the ‘More useful links’ section for a link to the detailed guidance notes .
To work out how much you can deduct from your income, add together the value of the property and the total amount of fees. Then take away the value of the painting.
Value of the property: £90,000
Plus the valuation fees: £400
Minus the value of the painting: £1,000
Total deduction: £89,400
So you can get Income Tax relief by deducting £89,400 from your total taxable income, but not gains, for the tax year in which you made the gift.
If you complete a Self Assessment tax return you can make your claim on the form. You can also ask HMRC to lower your payments on account for the next tax year. If you are due a tax refund, you can ask HMRC to pay all or part of it directly to a charity and, if you wish, as a Gift Aid donation.
If you pay tax through PAYE (Pay As You Earn) you can write to your Tax Office with details of:
HMRC will change your tax code for the current year or give you a refund for an earlier year.
You need to keep the following records:
You'll need these documents to support your Income Tax relief claim.
For more help you can contact the Charities Helpline.