Donating land, property or shares
As well as donating gifts of money, individuals can also help your charity by gifting shares. This can provide you with a significant source of income and can also be very a tax-effective way for the donor to give. Individuals don’t have to pay tax on land, property or shares you donate to charity. This includes selling them for less than their market value.
It is important to remember that when talking with a potential donor, you must not give financial advice and should encourage the individual to seek any advice they need from a qualified financial advisor.
Individuals get tax relief on both:
- Income Tax
- Capital Gains Tax
For more information on donations of property, land, or shares go to HMRC
For more information on tax for charities take a look at the ‘Tax Made Simple’ guides from Sayer Vincent
All shares that are transferable can be donated to your charity, but only publicly quoted shares qualify for tax relief for the donor. Publicly quoted shares include shares listed on the London Stock Exchange or Alternative Investment Market shares (AIM). For a full list of qualifying stock exchanges, visit the HMRC website
There are many factors to consider before making your decision. These include:
- Do you have a moral/ethical objection to holding shares from certain companies/industries?
- Do you transfer the shares yourself or get a broker to do it for you?
- What is your investment policy; do you keep the shares or sell them straight on?
- Is it worth your while to transfer the shares? Are there any burdensome restrictions?
We would recommend that your organisation has an agreed ethical policy in place that covers all these issues. If you cannot accept the shares for any of these reasons you may wish to look at the alternative methods to transfer shares listed below.
To transfer the shares in paper form (certificates), the process is:
1) Charity/donor obtains a stock transfer form from the Registrar of Shares
2) The form is received and filled out and signed by the transferring party
3) Return the completed form to the Registrar of Shares with original share certificate.
4) The charity will receive a new share certificate in their name.
Stocks may however be held electronically, in either a corporate nominee account (administered by the registrar) or a stockbrokers nominee account (administered by a stockbroker). In those instances, you will have to contact the nominee in order to check their precise requirements for the transferal of the shares.
You must advise the donor to keep a dated copy of the transfer form and to establish the value of the shares when they were transferred, so they can claim the tax relief. You can refer them to the relevant HMRC guidance notes for further information about the records they need to keep.
As well as transferring shares as outlined, your charity can also:
- Open a charity account with Charities Aid Foundation – CAF offer services including the donation of shares
- Donate shares to ShareGift – a charity that specialises in accepting small donations of shares which aren’t worth selling on their own
- Donors can sell the shares themselves and then donate the proceeds to charity. There are of course different tax implications should they choose to do this. For more information, see the HMRC website