Business owners and individual investors in Cheshire and Warrington play a vital role in supporting local causes. One way to make a significant impact is by gifting shares to Cheshire Community Foundation, allowing charities to benefit from the full value of your assets while you, the donor, enjoy tax relief at higher or additional rates. This can be a highly tax-efficient way to give back to the community, especially if you have shares in publicly listed companies.
How Gifting Shares Works
Gifting shares is straightforward and tax-efficient. When you donate shares listed on the stock market to a charity, such as Cheshire Community Foundation, there are significant benefits both to you and to the charity:
1. Full Value to Charity:
By donating shares rather than selling them yourself, the charity benefits from the full value of the asset without the deduction of Capital Gains Tax (CGT). If you were to sell the shares first, you’d have to pay CGT on any increase in their value, meaning less would be available to donate.
2. Tax Relief for the Donor:
Donors can claim income tax relief based on the market value of the shares at the time of the gift. This relief is particularly advantageous for higher and additional rate taxpayers, allowing them to reduce their taxable income.
Our Process: Converting Shares to Social Impact:
Once we are advised of your intention to donate shares, we would typically ask you to sell the gifted shares on our behalf. Importantly, this does not impact the tax savings to you. You will still be able to claim the full income tax relief and avoid any Capital Gains Tax, as if the shares had been transferred directly to us. This approach simplifies the process while still providing the maximum benefit to both the charity and the donor.
Understanding the Limitations
While gifting shares is an excellent way to support local causes, there are some limitations to be aware of:
- • Non-Qualifying Shares: Shares in private companies do not qualify for the same tax reliefs as listed shares. If you hold shares in a private business, it’s important to consult with a financial advisor to explore other tax-efficient giving options.
- • Gift Aid Limitations: Unlike cash donations, gifts of shares are not eligible for Gift Aid. This means we cannot increase the value of your donation by claiming an additional 25% from HMRC. While this reduces the immediate financial benefit to the charity compared to a cash gift, the tax reliefs available to the donor can still make share donations an excellent way to give back.
- Act Now, Before Possible Changes: With the budget on 30th October approaching, changes to Capital Gains Tax and income tax bands may be on the horizon. Acting now allows you to secure the current tax benefits before any potential shifts in the landscape, ensuring that your donation remains as tax-efficient as possible.
Get in touch:
If you’re interested in gifting shares or would like more information on how this works, please contact us at Cheshire Community Foundation. Together, we can make a meaningful difference to the people and projects that need our support most.