Donate shares
You may like to make a donation of Company shares to Everyman. This is a tax effective way for you to make a significant donation or to dispose of small holdings which you might regard as uneconomic to keep.
Usually, when selling shares, you will pay Capital Gains Tax (CGT) on the gain you have made since purchasing them.
For example; a few years ago Mr Smith bought 100,000 shares for £5000 in ABC Company. He now sells the shares, valued at £1 each. As a higher rate taxpayer, he pays CGT at 40% and has used his annual CGT exemption (indexation and reliefs have been ignored).
He receives £62,000:-
- £100,000 shares at £1.00 = £100,000
- Less base value at 5p each = £5,000
- Taxable gain on sale = £95,000
- CGT at 40% of taxable gain = £38,000
- Net value to Mr Smith = £62,000
However, as a Charity, we are exempt from CGT and would benefit from the full value of £100,000 if the shares were gifted to us. So a gift worth £100,000 to the Charity would only, in this example, cost you £62,000.
In addition, by making a gift of shares, the cost to you is reduced further, as the full value of the gift (eg £100,000) can be deducted from gross income for Income Tax purposes. To a higher rate taxpayer this represents an additional potential saving of £40,000. The cost of the £100,000 gift would be reduced to £22,000, with a tax saving of £78,000 as compared to selling the shares and retaining the proceeds.
Must the gift be of shares?
Yes. To qualify for the tax exemptions, you must transfer the shares to the Charity, either by completing a Stock Transfer Form (where the shares are held in your name) or by written instructions to brokers to hold the shares on trust for the charity as of that date (where the shares are held in a nominee account). It is not enough to sell the shares and donate the proceeds since the tax benefits would be lost.
The date of valuation for Income Tax purposes is either the date of the Stock Transfer Form or the date on which brokers/agents receive irrevocable instructions from you.
Which shares qualify?
Shares that are registered on any registered stock exchange (including Alternative Investment Market).
Independent, professional advice
We would be delighted if you decide to make a gift of shares to Everyman. However, please ensure that you have taken the advice of your professional advisors before going ahead.
Thank you again, for thinking of Everyman.
