Gifts of Assets
If you give certain assets to a UK charity you can claim Income Tax relief and lower your tax bill. You can also claim relief if you sell the asset to a UK charity at less than its market value. The assets you can claim relief on are:
- Shares and securities on the UK or another recognised stock exchange. Share giving is the most generous tax relief available to benefactors, combining relief on income and capital gains tax. To make a gift of shares you need to sign a transfer form to take the shares out of your name and put them into the charity’s name.
- Units in an Authorised Unit Trust
- Shares in a UK open-ended Investment Company
- Holdings in certain foreign collective investment schemes
Land and property in the UK
If you want to give land or property you must transfer the whole of your interest to the charity and cannot continue to live in/make use of it unless you pay an agreed market rent to the charity.
Calculating Income Tax relief on a gift of assets
This varies depending on whether you give or sell an asset to a charity. Income Tax relief on a gift is calculated by adding the market value of the asset to any costs eg legal fees and taking away any money/benefits gained from giving the asset to the charity. To work out the Income Tax relief when selling an asset to charity at less than market value, add the market value of the asset and any costs eg legal fees and take away any money/benefits gained from selling the asset to the charity. In both cases Income Tax relief is calculated by deducting the remaining balance from your total income for the tax year you make the gift to reduce your tax liability. If you complete a Self Assessment tax return you can make your claim on the form. You can also ask HMRC to lower your Self Assessment payments.
Keeping records of your gifts of assets
You need to retain:
- Share transfer documents
- A certificate from the charity confirming the asset has been transferred to them
- Any written request from a charity to sell land, property or shares on its behalf
- Other tax advantages of giving assets to charity
- There is no gain or loss for Capital Gains Tax purposes on any assets gifted to charity – not just those assets that qualify for Income Tax relief
- Income tax relief is available at your highest rate of tax
- All outright gifts to UK charities are excluded for Inheritance Tax purposes
- UK charities do not have to pay Stamp Duty on outright gifts of property or shares