How tax relief works
Income tax relief couldn't be simpler.
The relief from income tax is available for the full market value of the shares on the date of disposal. In other words, you will not pay income tax on the equivalent amount of your annual income in the tax year that the gift is made.
If you give shares worth £1,000 to Sightsavers and normally pay income tax at 22%, your income tax bill could be reduced by £220. Or if you pay income tax at 40%, you could save £400.
What about capital gains tax?
When you give shares to charity, you are also entitled to an exemption from any capital gains tax on the gains you may have made while you owned the shares. This could add up to another 40% in tax relief. However, any capital loss on the shares cannot be offset against your other capital gains.
In order to make these savings all you need to do is:
- give the shares to a Sightsavers
- claim the tax relief on your tax return
- have paid the amount of tax deducted by the end of the tax year in which the gift is given (in other words the gift cannot give rise to a tax credit)
In order to qualify for the relief, the shares must be listed or dealt on a recognised stock exchange.
For further information on how to calculate and claim your tax relief visit http://www.hmrc.gov.uk/charities/giving-land.htm
You may wish to discuss the tax consequences of your share donation with your financial adviser as Sightsavers cannot advise you on your personal circumstances.
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