Give Shares Tax-Effectively
If you are a UK tax payer, a gift of qualified shares is an easy and highly tax-effective way to support Earthwatch.
A gift of shares to Earthwatch exempts you from a capital gains tax liability on any increase in the value of the donated shares since you bought them. If, however, your donated shares have gone down in value since you bought them, you will not be able to use this loss to offset any other capital gains tax liability you may have.
Gifts of shares also allow you to claim relief (at the highest rate of income tax you pay) on the full market value of the shares on the day you make the gift, plus any associated costs you incur to make the gift, such as stockbroker fees. Income tax relief applies in the same year in which the gift of shares is made to Earthwatch.
Taken together and considering current rates of taxation, these two forms of tax relief mean that if you made a gift of shares to Earthwatch worth, for example, £10,000 (with a capital gain of £5,000), as a UK tax payer you could pay up to £6,000 less in tax compared to a non-charitable disposal - clearly an excellent savings that results in the effective cost of the gift to you being just £4,000.
To qualify for income tax relief, shares and securities must be listed or dealt in on a recognised UK or overseas stock exchange, units in a UK authorised unit trusts (AUT), holdings in certain foreign collective investment schemes, and shares in open-ended investment companies (OEIC). Shares that are not publicly traded on the open market and therefore not eligible for income tax relief can still be given to Earthwatch.
You can make a gift of shares in one of two ways:
- You can transfer the shares intact (i.e. not sell them first) to Earthwatch. Shares can be transferred electronically or via paper share certificates. You should first check that Earthwatch is willing to accept the proposed shares and discuss how best to make the transfer.
- You can transfer the shares to your stockbroker, who will sell them immediately upon receipt and pass the cash value of your gift, less the broker's cost, to Earthwatch. If you choose this option, to be eligible for tax relief, you must have evidence for HMRC of your gift of shares to Earthwatch before the shares are actually sold. Please call Earthwatch to discuss how best to evidence this.
You will be responsible for claiming tax relief in your tax return, so remember to keep evidence of the gift (transfer forms, correspondence, etc.) and the date on which it was made. Please consult a qualified financial adviser for professional tax advice.