Give shares or securities
Giving shares and securities to charity is a great way of unlocking capital and passing it on to ME Research UK. Since April 2000, gifts of shares have been both eligible for full personal income tax relief and exempt from capital gains tax. If you are a basic rate taxpayer, a gift of £1,000 listed shares could reduce your income tax bill by £220, and by £400 if you are a higher rate taxpayer. In addition, no capital gains tax is payable on gifts of shares to charity. Similar relief also applies if you wish to donate land or buildings.
Who can give shares tax-efficiently?
If you are a UK taxpayer who holds listed shares, unit trusts or OEICs, you can donate them to charity and claim personal tax relief. Non-UK taxpayers can also donate shares but are not eligible for tax relief.
How does it work?
You 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 brokers’ fees. If you are a higher-rate taxpayer and give a charity £1,000-worth of shares you will be able to claim a reduction of £1,000 in your taxable income when you complete your tax return for the year, reducing your tax bill by £400. No capital gains tax is payable on any increase in the value of the shares. In theory this could mean a further ‘saving’ of up to 40%. However, where shares have fallen in value the loss cannot be used to offset a capital gains tax liability.
- Value of shares donated: £1,000
- Income tax relief for higher rate taxpayer: £400
- Potential capital gains saving: £400
- ‘Cost’ to the higher rate taxpaying donor: £200
Shares or cash?
Whether you decide to give shares or cash through Gift Aid will depend on your individual tax situation. For example, if you have shares which have a large capital gains tax liability, you may be better off giving these directly to charity than selling them yourself, paying the tax and donating the proceeds.
Giving shares: the practicalities
If you intend to give shares you may wish to approach the charity you want to give to, in the first instance, as many charities will arrange the transaction or offer guidance. Alternatively, organisations such as Charities Aid Foundation can help — you can gift the shares to the Charities Aid Foundation which will sell them and pass on the proceeds to your charity of choice.
ShareGift
You can also use ShareGift, the charity donation scheme which exists to make it easy for you to give any number of shares to charity. It specialises in accepting small holdings of shares, particularly those which are not worth selling because that would cost more than they are worth, and it also helps people with larger gifts of shares for their favourite charities.
