Gifting shares to charity

Why donate shares to charity?

Donating qualifying shares can be one of the most tax-effective ways to give.

When you donate HMRC qualifying shares to charity, you may be able to claim Income Tax relief on the values of the shares. You may also be exempt from Capital Gains Tax on the gift. This can make share giving a tax-effective way to support the causes that matter to you.

How to donate shares to charity

There are three main ways to give shares through CAF:

1. Gift shares directly to us

Gift shares directly to us and we can place the proceeds in a Gift Aid Charity Account or CAF Charitable Trust.

For a long term approach to giving you can either place the proceeds into the Charitable Trust or, subject to our investment policy, hold the shares in the Charitable Trust to generate an investment return. We will help you manage and grow the funds to increase the amount to give to charity.

With a Charity Account, you will need to sell the shares yourself. We then place the proceeds into your account allowing you to give to charity when and where you choose.

2. Sell the shares yourself and donate the proceeds

Depending on your personal tax situation, selling shares yourself and donating the proceeds to your Charitable Trust or Charity Account could be more tax effective for you.

By donating the proceeds as cash gifts you could get a Gift Aid uplift of 25%. If you are a higher rate taxpayer, you can also claim additional rate tax relief on the gross value of the cash donation, after taking into account the Gift Aid tax claimed by the charity.

3. Sell your shares to CAF

You can sell your shares to us for less than their value. The gain generated will be placed into your Charity Account or Charitable Trust for you to donate when you choose.

This means that you can reduce your taxable income by the donation amount (i.e. the market value of the shares, plus any costs of the transfer, less the sale price paid by the charity), reducing your overall income tax liability.

What makes gifting shares tax-effective?

Share giving can be tax-effective because qualifying shares donated to a UK charity may be eligible for Income Tax relief on their full market value. The donor is also treated as making no gain or loss for Capital Gains Tax purposes.

This means the donor may receive relief at their highest marginal rate, while the charity receives the full value of the shares.

If a UK donor sells shares and gives the cash proceeds to charity, they may need to consider any Capital Gains Tax due on the sale. The cash gift may then be eligible for Gift Aid, and the donor may be able to claim higher-rate or additional-rate tax relief, depending on their circumstances.

What type of shares qualify?

A wide range of shares and securities can be gifted in this way. These include those listed or dealt on a recognised stock exchange in the UK and many international exchanges: the USA, Canada, Australia, Hong Kong, New Zealand, Japan, Colombo, Singapore, Johannesburg, Switzerland and the EU countries. We will be happy to advise you before you make your gift whether or not the shares are listed on a recognised stock exchange.

There are other investments that also qualify, including authorised unit trusts, UK open-ended investment company shares and certain foreign collective investment scheme holdings. We recommend that you seek confirmation from HMRC that your investment qualifies for Income Tax relief.