A gift of £1,000 in qualifying shares could reduce a basic rate taxpayer’s income tax bill by £220 and a higher rate taxpayer’s by £400. No capital gains tax is payable on gifts of shares to charity.

Stop press: The Chancellor announced in the Budget that from this year a similar relief will apply to gifts of land or buildings:

Regular gifts can be deducted from pre-tax salary. A monthly gift of £20 will in effect cost a basic rate taxpayer only £15.60 and a higher rate taxpayer £12.

In addition, the Inland Revenue is committed until April 2003 to adding 10%, so a £20 Gross donation will be worth £22 to the charity. Potential payroll givers should enquire whether their employer operates a scheme. Once the employee is signed up, the employer takes care of the administration (with the help of specialist agencies).

The value of individual gifts, large or small, can be increased by 28%. The donor just needs to pay enough tax and make a Gift Aid declaration – for example by box ticking on appeal coupons or charities’ literature. The charity claims back the basic rate income tax paid by the donor. Donors who pay higher rate tax can claim additional relief on the gross amount of the gift, worth 23 pence on a net donation of £1.

Charitable legacies are paid before tax is deducted, reducing the total amount of tax paid on the estate.

A charitable trust is a way to provide support for causes during and beyond the donor’s lifetime. Contributions can be made in ways that attract the full range of tax reliefs. A personal charitable trust can be set up privately through a solicitor. Alternatively, organisations like the Charities Aid Foundation offer trust products that invest in pooled funds whilst giving the donor discretion over the use of the proceeds. Giving shares to charity has long been a useful way of unlocking capital and passing it on to good causes. Since April 2000 there have been tax incentives that make it particularly attractive to give listed shares, unit trusts and OIECS.

Donors can claim tax relief equal to the market value of the shares on the day the gift is made, plus any associated costs such as brokers’ fees. Relief is against the donor’s income tax for the year. For example, if a higher rate taxpayer gives a charity £1,000 worth of shares they will be able to claim a reduction of £1,000 worth of shares they will be able to claim a reduction of £1,000 in their taxable income when they fill in their tax return for that year, reducing their tax bill of £400.

No capital gains tax is payable on any increase in the value of the shares. In theory this could mean a further ‘savings’ of up to 40%, although in practice the tax saving is likely to be less than that (And, NB, where shares have fallen in value the loss cannot be used to offset a CGT liability)

Gifts can be very large or quite small and given to all sorts of charities. Substantial gifts of shares can be used to set up a personal charitable trust.

Helen gave her building society windfall shares, worth £700, to GMTV’s Get Up and Give Appeal.

"The only time I ever remembered my windfall shares was when I had to do my tax return. It was a great way to give without actually writing out a cheque".

Angela owned share worth £25,000 in a High Street bank. She discussed matters with her financial adviser and decided to give them to charity.

"I was keen to get income tax relief as a result of my donation. Donating the shares would also help me to tidy up my portfolio".

Alan Stevenson and his family used shares from an inheritance to set up a charitable fund operated by the Greater Bristol Foundation.

"This way I can dispose of shares without paying capital gains tax, and I can offset it against taxed income. It’s win, win really. It gives more money to you and to the charity".

Whether the donor gives shares or gives cash through Gift Aid will depend on their individual tax situation and whether they want the charity or themselves to get the greatest benefit.

Donors are best advised, in the first instance, to approach the charity they want to give to, as many charities will arrange the transaction or offer guidance. Donors handling things themselves will need to contact the company registrar (if they hold certificates) or a stockbroker (for shares held in a nominee account). Sharegift, the charity share donation scheme, specialises in parcelling up small holdings and making donations.

For more information and links to other organisations mentioned here, visit

www.givingcampaign.org.uk