In what amounts to a double tax-break, individuals and companies who give shares are not liable for capital gains tax under existing rules.

The scheme, introduced by the Government [Budget, April 2000], also gives income tax relief for the full market value of the shares.

Investors could, therefore, offset a gift of shares, which represents money they have never actually possessed, against some or all of their income tax liability for a year. For example, if you purchased shares some years ago for £1,000 which have since grown in value to £20,000, and you were to seek to realise them to find money to make an income-tax-efficient donation, you might be faced with a significant Capital Gains Tax bill.

However, under the new scheme you can gift the shares to the Oundle School Foundation, eliminate the capital gain, and receive an income-tax benefit worth up to £8,000.

This is because you can deduct the £20,000 from your taxable income if you would otherwise have paid tax on at least £20,000 of income. The relief is claimed on the self-assessment tax return with immediate cash-flow benefit. There is no need to await an Inland Revenue repayment.

What to do now? 

Download the documents entitled Donating Shares Advice Sheet and Share Giving Explanatory Notes

 

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