Tax benefits of giving assets to charity
Most people know that cash donations can attract tax relief. However, fewer people realise that other gifts help too. Indeed, giving land, property or qualifying shares brings valuable advantages. Therefore, it is worth exploring the tax benefits of giving assets to charity.
What qualifies for relief
Firstly, you can donate land, property or shares to a UK charity. Alternatively, you can sell them below their market value. In both cases, you may claim two forms of relief. Specifically, you could gain:
- Income Tax relief
- Capital Gains Tax (CGT) relief
However, one important exception applies. Income Tax relief does not cover gifts to Community Amateur Sports Clubs (CASCs).
How Income Tax relief works
Next, let us look at how you claim the relief. Essentially, you deduct the value of your qualifying donation. Then, you subtract it from your total taxable income for that year.
Moreover, the claim process depends on your circumstances. If you complete a Self Assessment tax return, use the ‘Charitable giving’ section. Otherwise, you can contact HMRC directly. In that case, HMRC may repay you or adjust your tax code.
Saving on Capital Gains Tax
Additionally, qualifying gifts escape Capital Gains Tax altogether. Therefore, you pay no CGT on eligible gifts of land, property or shares.
Furthermore, special rules apply when you sell below market value. Here, any gain uses the actual amount paid by the charity. Consequently, the calculation ignores the asset’s full market value.
Keeping the right records
Finally, always keep clear evidence to support your claim. Specifically, retain records showing the charity made and accepted the gift. Sometimes, the charity asks you to sell the asset first. In that case, keep proof of both the gift and the request. As a result, you protect your relief and avoid unnecessary tax.
Speak to us today
Ultimately, the tax benefits of giving assets to charity can prove significant. So, if you plan to donate, please get in touch today. We would happily guide you and help you claim correctly.
