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Since 6 April 2000 individuals and companies have been able to claim income or corporation tax relief on gifts to charity of certain shares, securities and other investments. The rules for these are contained in ITA07/PT8/CH3 and CTA10/PT6/CH3. Detailed guidance is available in within on gov.uk.

It is important to note that the recipient of the gift must be a charity. The other bodies listed in IHTA84/SCH3, see , do not qualify.

If the donor is eligible for Income Tax or Corporation Tax relief under these provisions, TCGA92/S257(2A) to (2C) reduces the charity鈥檚 acquisition cost by the amount of the relief. There is no requirement that the relief is actually given. If the available Income Tax or Corporation Tax relief is greater than the charity鈥檚 acquisition cost that cost is reduced to nil. This is likely to be the case, if the assets are gifted, as shown in example B below.

Example A

Lawrence owns shares in Ziggy plc, a quoted company, which he acquired at a cost of 拢18,000. He sells the shares to a charity for 拢30,000 when they are worth 拢50,000, incurring 拢50 in transaction fees. Lawrence can claim Income Tax relief of 拢20,050 (拢50,000 + 拢50 - 拢30,000). The charity鈥檚 acquisition cost is reduced by the amount of the Income Tax relief, 拢20,050, giving it an acquisition cost of 拢9,950.

Example B

Instead of selling the shares at undervalue, Lawrence gifts the shares, again incurring transaction fees of 拢50. As an expression of its gratitude the charity gives Lawrence tickets to an event worth 拢500. Here, Lawrence can claim Income Tax relief of 拢49,550 (拢50,000 + 拢50 - 拢500). For Capital Gains Tax purposes, Lawrence is treated as disposing of the shares for no gain/no loss (拢18,050). Normally, this would also be the charity鈥檚 acquisition cost but this is reduced to nil because of the Income Tax relief of 拢49,550.