Giving shares

Making a donation of shares is a highly effective way of supporting a charity, and in many instances the most tax-efficient course.  When giving shares, a donor can claim income tax relief on the market value of the shares on the date the gift is made, as well as any incidental costs such as broker’s or legal fees.  In addition, when shares are donated to a charity the donor does not have to pay Capital Gains Tax (CGT), currently 28%, on any increase in value of the shares since they were bought. This means that for a higher rate taxpayer, a gift of shares could be worth significantly more in the hands of St John’s than if you had sold them yourself. 

As an example, we can look at a higher rate taxpayer who has shares bought for £50, which have doubled in value to £100:

Donor keeps shares

 

Value of Shares:

£100

Purchase Cost of Shares:

£50

Capital Gains Tax (CGT):

£14

Residual Profit for Donor (subtract Purchase Cost & CGT):

£36

 

Donor makes a gift of shares

 

Income Tax Relief:

£40

Cost of Gift to Donor:

£60

Value of Shares to St John’s:

£100

 

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