Archive Website of the UK government

Assets that you can get Income Tax relief on

You can claim Income Tax relief if you give an asset to a UK charity or sell it to a UK charity at less than its market value. The assets you can claim relief on are:

• shares and securities listed or dealt in on the UK or another recognised stock exchange
• units in an Authorised Unit Trust (AUT)
• shares in a UK Open-ended Investment Company (OEIC)
• holdings in certain foreign collective investment schemes - generally schemes set up outside the UK that are similar to AUTs and OEICs
• land and property in the UK

If you need help to decide if you can claim relief on an asset you can call HM Revenue & Customs (HMRC) on 0845 302 0203. Lines are open from 8.00 am to 5.00 pm. Or you can write to HMRC at:

HM Revenue & Customs Charities
St John's House
Merton Road
Liverpool
L75 1BB

• Find out which stock exchanges are recognised Opens new window

Giving an asset to a UK charity

First you need to contact your chosen charity to make sure it can accept your gift.

If you want to give shares you need to sign a transfer form to:

• take the shares out of your name
• put them into the charity's name

If you want to give land or property you must transfer the whole of your interest in that land or property to the charity. This means that you can't give your property to charity and continue to live in it. If more than one person owns the property call HMRC on 0845 302 0203 for guidance on how Income Tax relief is given.

Working out the Income Tax relief you can claim

The way you work out Income Tax relief is different depending on whether you give an asset to a charity or sell it to a charity at less than its market value.

Tax relief on a gift

To work out the amount of Income Tax relief you'll get for making a gift to a charity, add together the market value of the asset you're giving and any costs like legal fees. Then take away any money or other benefits you (or anybody connected with you) get for giving the asset to the charity.

Tax relief on a sale at less than market value

To work out the amount of Income Tax relief you'll get when you sell an asset to a charity at less than market value, add together the market value of the asset you're selling and any costs like legal fees. Then take away the amount you sell the asset for. After that take away any money or other benefits you (or anybody connected with you) get for selling the asset to the charity.

In both cases you can get Income Tax relief by deducting what's left from your total income for the tax year you make the gift. A tax year runs from 6 April one year to 5 April in the next. You can't carry the relief forward or backwards to any other tax year.

Market value

The market value is the price that the asset might reasonably be expected to sell for in an open market. There can be different rules if the charity has to do something in return for receiving the asset.

If you're giving or selling land or property you should usually value it on the date you transfer it to the charity. It's likely that you'll need to pay a professional adviser to work out the market value. You can add those costs to the market value when you work out your tax relief.

There are different rules for working out the market value of shares and securities or other investments. There are also different rules for calculating the relief if the charity has to do something in return for receiving the asset, or if the asset was acquired for the purposes of donating it to charity.

• Find out more about qualifying investments and market value Opens new window

Income Tax relief example

• you own a second property and decide to give it to a UK charity
• a qualified property agent values the property at £90,000 and charges £400 for the valuation
• the charity is grateful and gives you a painting worth £1,000

To work out how much you can deduct from your income you add together the value of the property and the total amount of fees. Then you take away the value of the painting:

Value of the property £90,000
Plus valuation fees £400
Less value of the painting £1,000
Total deduction £89,400

So you can get Income Tax relief by deducting £89,400 from your total taxable income for the tax year you made the gift.

• Giving assets to charity

How to claim tax relief

You can only claim Income Tax relief for the tax year you make the gift in.

If you complete a Self Assessment tax return you can make your claim on the form. You can also ask HMRC to lower your Self Assessment payments. If your gift means that you'll get a tax refund, you can ask HMRC to send all or part of it directly to a charity.

If you pay tax through PAYE (Pay As You Earn) you can write to your Tax Office with details of:

• your gift or sale to a charity
• how much tax relief you would like to claim

HMRC then changes your tax code for the current year or gives you a refund for an earlier year.

• Contact details for all Tax Offices Opens new window

What records do I need to keep?

You need to keep the following records:

• share transfer documents
• a certificate from the charity that confirms land or a property has been transferred to them
• any written request from a charity to sell land, property or shares on its behalf

You'll need these documents to support your Income Tax relief claim.

Other tax advantages of giving assets to charity

Other tax advantages of giving assets to charity include:

• you're treated as making no gain or loss for Capital Gains Tax purposes on any assets gifted to charity - not just those assets that qualify for Income Tax relief
• Income Tax relief is available at your highest rate of tax
• all outright gifts to UK charities are excluded for Inheritance Tax purposes
• UK charities don't have to pay Stamp Duty on outright gifts of property or shares
  

Other tax efficient ways of giving to charity

There are other tax efficient ways you can give to charity like:

• Gift Aid
• Payroll Giving through your salary or pension

If you claim Income Tax relief for gifts of assets you've made to charity, the amount you can give through Gift Aid might be reduced because your total tax paid for the year is reduced. Or you may not be able to use Gift Aid at all if all your tax is refunded for that year.

Depending on your personal circumstances it may be more cost effective for you to sell an asset and make a Gift Aid donation out of the proceeds rather than giving the asset itself to charity.

• Read about Gift Aid

• Read about Payroll Giving

Useful contacts

• Money, tax and benefits contacts