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GIFTS OF STOCKS & SHARES

You are able to claim income tax relief on gifts to charity of most stocks and shares, whether you are resident or non-resident in the UK. This is in addition to the existing relief from Capital Gains Tax.

In order to calculate the amount of tax relief, you should deduct the value of your donation from your taxable income for the tax year in which the donation is made. The amount you can deduct is the market value of the shares on the day of the gift plus any incidental costs of disposing of the shares such as broker's fees.

Donors can claim relief at their top rate of tax on their Self Assessment or Corporation Tax return.

For example:

A donor gives a gift of 2,000 shares in a company, which he bought for £6,000 and now have a market value of £10,000. The broker's fee, paid by the donor to arrange the transfer is £50. The tax deduction is calculated as follows:

Original cost of shares  £6,000

Current market value of shares      £10,000

Broker's fee  £50

Deduction against income  £10,050

Assuming the donor is paying income tax at the higher rate of 45%, their income tax bill will be reduced by (£10,050 @ 45%) £4,522. This effectively means that the donation of £10,000 will actually cost the donor just £5,528 after tax relief (£10,050 - £4,522).

The donor will also save the Capital Gains Tax that should have been paid on the increase in the value of the shares (from £6,000 to £10,000), which is £4,000. The current rate of Capital Gains Tax for individuals who pay above the basic rate of tax is 28%. Therefore, in effect, the donation has only cost them £4,408 (£5,528 - 28% of £4,000), which is less than half of the value of the gift.


Qualifying stocks and shares

The shares that qualify for income tax relief are listed or dealt in on a recognised stock exchange, whether in the UK or elsewhere, including shares traded on the Alternative Investment Market; units in a UK authorised unit trust; shares in a UK open-ended investment company (OEIC); and holdings in certain foreign collective investment schemes (schemes outside the UK that are equivalent to unit trusts and OEICs).

If you are interested in making a gift of stocks or shares, we advise you to seek specific advice from your tax or financial adviser.

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The Calne Foundation Trust

St Mary's School
63 Curzon Street
Calne
Wiltshire
SN11 0DF
United Kingdom

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