Giving shares to Royal Holloway, University of London is one of the most attractive methods for maximising the value of a gift to the College whilst minimising income and Capital Gains Tax liability to the donor. Donated shares are free of Capital Gains Tax and the value of the shares at the time of transfer can be offset against Income Tax liability.
The College can accept share gifts of any size. You might hold windfall shares as a result of a privatisation or demutualisation. Alternatively, you might feel able to dispose of shares which are no longer part of your investment strategy. All share gifts are of course important and greatly appreciated.
Tax relief is available to UK taxpayers donating:
- Shares and securities listed on the UK Stock Market, the Alternative Investment Market and recognised stock exchanges overseas
- Units in a UK unit trust; and,
- Shares in a UK open-ended investment company (OEIC).
Donors can claim Income Tax relief equal to the market value of the shares on the day the gift is made, plus any associated costs such as the broker’s fees. In addition, Capital Gains Tax that you may have incurred on any increase in the value of the shares since you bought them will not apply.
|Gift of shares worth:
|Value of shares donated:
|Amount available to deduct from income:
|Income tax relief for higher rate taxpayer:
|‘Cost’ of gift to a donor paying higher rate tax:
Please see the examples below which illustrate the power of giving shares:
Donating shares originally purchased for £10,000 which are now worth £25,000 will bring £25,000 to the College but higher-rate taxpayers will receive income tax relief of 40% x £25000. In addition, by donating them to the College rather than selling them to fund a donation, a donor will save 40% x £15,000 (a Capital Gains Tax saving of £6,000). The true cost of a £25,000 donation in this example would therefore be just £9,000.
Shares on a start up business are now worth £1million. If an amount of shares worth £100,000 were donated to the College this would save £40,000 in Capital Gains Tax. If the income of the donor in that year is £250k they would be taxed on £150,000 (250K minus the value of the 100K gift). So the individual would only be taxed on an income of £150,000 which would save £40,000 in income tax. The net cost of a £100,000 gift in this example would therefore be £20,000.
Please note: We strongly recommend that those wishing to donate shares consult their tax adviser before doing so, as the exact benefits depend on the capital growth of the shares and an individual’s tax situation.
To make a gift of shares, please email the Development Team or call +44(0)1784 414478 in the first instance, so that we can help to arrange the transaction.