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Giving your shares: A tax-efficient alternative to charitable giving

Giving your shares: A tax-efficient alternative to charitable giving

Posted on 15 November 2019

Cash is generally the type of asset most commonly donated to charity. However, individuals are increasingly looking for other forms of charitable giving which suit their needs and objectives. Gifts of assets such as shares, intellectual property or rented property offer donors an alternative way of being charitable while allowing them to maintain their income levels and still benefit from preferential tax treatment.

A charitable donation of assets, as an alternative to cash, has the following benefits for the donor:

  • Unaffected cash flow – An advantage for individuals who are asset rich but without a significant or consistent income stream.
  • Tax efficiency – Certain assets may be gifted to a charity with the following tax benefits:
    • Little or no capital gains tax, provided it is a genuine gift to a charity that meets certain conditions.
    • Reduced or eliminated inheritance tax on gifts that qualify for a relief such as "business property relief" and/or "agricultural property relief".
    • Income tax reliefs for taxpayers who make eligible donations of certain real property (such as listed shares).
  • Retained control – Despite having gifted the asset to charity, the donor can take steps to retain certain rights in respect of those assets, such as voting rights in the case of company shares. 

Such advantages are most commonly utilised by individuals wishing to make significant donations and/or to set up their own charitable foundation in a tax efficient manner.

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