Give shares or property
Since April 2000, giving land, property, shares and securities to charity has become even more attractive as individuals are able to get tax relief on the gift. This relief is in addition to the existing relief on capital gains for gifts to charity of gifts, securities and other assets.
Shares
Tax relief is available to UK taxpayers donating shares and securities listed on the UK stock market, the Alternative Investment Market and recognised stock exchanges overseas. It is also available for units in a UK unit trust and shares in a UK open-ended investment company (OEIC). You might have for instance, windfall shares which of little value to you or shares which generate more paperwork than income.
Donors can claim income-tax relief equal to the market value of the shares on the day the gift is made, plus any associated costs such as the broker's fees. In addition, you will avoid capital gains tax that you may have incurred on any increase in the value of the shares since you bought them will not apply.
Example
John Smith, a higher rate taxpayer, decides to transfer some shares given to him, directly to us. At the date of transfer they are worth £5,000. He is then able to off-set £5,000 from the total income for the year end in question, thus saving 20% as a basic rate tax-payer (i.e. £1,000) or 40% for higher rate tax-payers (£2,000). No capital gains tax arises on the transfer of shares, and we will have received £5,000 worth of shares which we can either hold as an investment or sell to realize their value. If Mr Smith had chosen to sell the shares, he would have incurred up to £900 of capital gains tax. By donating £5,000 of shares to us, he has actually saved up to £2,900 (£900 capital gains tax + £2,000 income tax savings)
Example
Some donors choose to sell shares to us below the market value: Mrs Jones, a higher rate taxpayer, has quoted shares for which she paid £7,000 in 1990 and are now worth £30,000. She agrees to sell them to us for £7,000 and, in effect, donate to us the increase in value of £23,000. She receives a payment of £7,000 from us and income tax relief of £9,200 (40% of £20,000). Mrs Jones also avoids having to pay up to £3,726 capital gains tax liability on the untapered gain of £20,700 (i.e. 90% of £23,000)
Gifts of Land or Property
East London Community Foundation can accept gifts of land or property during a donor's lifetime and now these gifts attract the same tax incentives as gifts of shares. Whether it be a plot of land you no longer uses or something on a grander scale, this tax relief applies to any property, providing that the whole interest in the property is donated and the Community Foundation has agreed to accept it.
The relief is given for the market value of the property, as a deduction from your income chargeable to income tax for the tax year in which the gift is made. The income-tax relief is in addition to any exemption from capital gains tax that may also be available to you as donor. All the tax relief goes to the donor of the property.
Income tax relief is based on the “market value” of the investments at the time of the transfer to the charity and is given against an individual’s income for the year in which the gift is made. It is claimed by completing the details in your self-assessment return or by requesting an amendment to your PAYE code.
Example
Mrs Green decides to donate her second property to the Community Foundation. It is valued at £300,000. She bought the property for £90,000. If she also has valuation fees of £400 to offset, she will be able is able to claim tax relief on a total of £90,400.
More information about tax implications of giving shares or property to charity is available from the Inland Revenue: IR178 Giving shares and securities to charity. Order it by telephone on 0845 9000 404 or download it at www.hmrc.gov.uk.
We help communities in London, particularly those in North East London, in Barking & Dagenham, Enfield, Hackney, Haringey, Havering, Newham, Redbridge, Tower Hamlets and Waltham Forest.
