Guidance

Calculate the value of your donation to charity

Work out the amount of Income Tax or Corporation Tax relief you can claim if you give away or sell land, property or shares to a charity.

If you give land, property or shares to a charity (this includes selling them for less than their market value), you could pay less:

  • Corporation Tax and Capital Gains Tax - if you’re a limited company
  • Income Tax and Capital Gains Tax - if you’re an individual

If you give land property or shares to a CASC, you could pay less Capital Gains Tax if you’re a limited company or an individual.

There are different rules around what you can give if you’re a limited company or an individual.

The way you work out your tax relief is different depending on whether you give away land, property or shares to charity, or sell them for less than they’re worth.

Market value

You’ll need to know how much the gift would sell for in an open market (its ‘market value’) to calculate your tax relief.

You should use the value of the gift on the date you transfer it to the charity or CASC (known as the ‘disposal date’). You can get professional help with this and add these costs to the market value when you work out your tax relief.

Calculate tax relief on a gift

If you or your company donates land, property or shares to charity or CASC, work out your tax relief amount by:

  1. Working out the value of the gift on the date you transferred it (the ‘disposal date’).

  2. Adding costs like legal fees or brokers fees.

  3. Subtracting the value of any benefits the charity or CASC gives you as a result of the gift.

  4. You’ll be left with your tax relief amount.

Example:

ABC Ltd wants to give a property it no longer needs to a charity it supports.

A property agent values the property at £90,000 and the company is charged £400 for the value and other legal fees.

As a thank you gift, the charity gives the company tickets to an event worth £500.

The tax relief the company can claim is:

  • the value of the property: £90,000
  • plus the valuation and legal fees: £400
  • equals: £90,400
  • minus the value of the benefit received: £500
  • total tax relief amount: £89,900

Calculate tax relief on a sale at less than market value

If you or your company sells land, property or shares to a charity or CASC for less then its market value, work out your tax relief by:

  1. Working out the market value on the disposal date.

  2. Adding costs like legal fees or brokers fees.

  3. Subtracting the selling price.

  4. Subtracting the value of any benefits the charity or CASC gives you as a result of the gift.

  5. You’ll be left with your tax relief amount.

Example:

John owns 1,000 shares in XYZ plc, a company quoted on the London Stock Exchange. The shares are valued at £4.50 each.

John would like to give the shares to a charity or CASC, but needs to get some money for them. So he agrees to sell them to a charity for £2 each.

As a token of gratitude, the charity gives John a book worth £25.

The tax relief John can claim is:

  • the value of the shares: £4,500
  • minus the amount the charity pays: £2,000
  • equals: £2,500
  • minus the value of the benefit received: £25
  • total tax relief amount: £2,475

If you’re an individual

You can claim Income Tax relief by deducting the value of your donation from your total taxable income for the tax year (6 April to 5 April) in which you made the gift or sale to charity.

If you’re a limited company

You can claim Corporation Tax relief in the Company Tax Return that covers the date of the gift or sale to charity.

The most you can deduct is the amount that reduces your company’s profits to zero.

Published 5 November 2014