RE1853 - Gifts of Land, Buildings Shares & Securities to Charity: what disposals qualify?

a. The relief is available where disposals are made "otherwise than by way of bargain at arms length". This includes disposals by way of gift or by sale at undervalue.

To claim the relief the individual must dispose of the investments to an organisation that has been recognised as a charity for UK tax purposes. Relief cannot be claimed for investments that have already been sold even if the proceeds are given to the charity. If the investments are sold the individual may be able to make a cash donation using Gift Aid, but a CGT charge may arise on the sale of the investment. Some donors may want to give investments to a charity, but are asked by the charity to sell them on the charity's behalf, with the proceeds going to the charity.

This is possible and the disposal can still be eligible for the relief, but it must be absolutely clear that the donor has given the qualifying investments to the charity irrevocably before selling them. It must also be clear that the individual has sold the investments at the request of and on behalf of the charity. If you enquire into such a disposal you will need to obtain clear evidence that the qualifying investments were irrevocably given to the charity and that when the individual sold them they were acting as agent for the charity.

b. 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 4 years before their donation as part of a scheme or arrangement and:

• either the cost of acquisition of the investment is suppressed, for example, by the attachments of options to the investment;

• the market value of the investment is artificially inflated at the date of gift to the charity

the relief will be restricted.