Donating shares or securities to ME Research UK is not only a wonderful way to help our cause, but it could also be a shrewd financial decision. Since April 2000, it is one of the most tax efficient ways to give as no Capital Gains Tax is payable on the shares you donate and you may be able to claim Income Tax relief too.
If you are a basic rate taxpayer (i.e., pay tax at 20%), a gift of £1,000 in listed shares could reduce your Income Tax bill by £200, £400 if you are a higher rate tax payer (i.e., pay tax at 40%), and more if you are an additional higher rate tax payer. As no Capital Gains Tax is payable on any gain you would have made on the shareholding, you need not worry about the gain. 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. 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
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 donate shares, you may wish to contact us in the first instance as we may be able to be of assistance. Alternatively, organisations such as the Charities Aid Foundation (Tel. 03000 123000) can help. You gift the shares to the Charities Aid Foundation, which will sell them and pass on the proceeds to us.
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.