Making a donation via shares is one of the most tax-efficient ways you can give as you can claim Income Tax relief on the value of the shares and an exemption from Capital Gains Tax. With the higher rates of income tax at 40% and 45% and capital gains tax at 18% (or 28% for higher rate tax payers), this can amount to a substantial tax break.
|Value of shares||Amount of income tax relief you can claim||Cost to you||Value to St Edmund's|
|Basic rate taxpayer (20%)||£1,000||£200||£800||£1,000|
|Higher rate taxpayer (40%)||£1,000||£400||£600||£1,000|
|Additional rate taxpayer (45%)||£1,000||£450||£550||£1,000|
Tax relief will be given for the market value of the shares as a deduction from your income tax liability for the tax year in which the gift is made. Additionally, you will be exempt from paying Capital Gains Tax on any increase on the value of the shares that you would have had to pay if you had simply sold them.
All shares that are transferrable can be donated, but only shares that are publicly quoted on a recognised stock exchange qualify for tax relief. Donors of shares should keep a copy of the transfer form or letters relating to the donation and can claim the tax relief through their self-assessment tax return. You should discuss all arrangements carefully with a solicitor or financial advisor before proceeding with a sale or transfer.
If you intend to give shares you estimate are worth less than £5,000 the College would prefer you to sell the shares and donate the proceeds to St Edmund’s. To make sure that you receive the income tax relief, the College recommends that you follow advice given by HMRC.