Examples
Example 1
You give 5,000 shares, worth £10 each, in a company quoted on the London Stock Exchange. A broker's fee of £50 is charged for handling the transaction. As a token of gratitude the College gives you a gift worth £500.
The deduction that you can make is:
| The value of the shares | £50,000 |
| plus the broker's fee | £50 |
| £50,050 | |
| less the value of the benefit received | £500 |
| £49,550 |
Example 2
You own 1,000 shares in a company quoted on the London Stock Exchange. The shares are valued at £4.50 each. You would like to give the shares to Downing but need to realise some money from them. So, you sell them to Downing for £2 each. As a token of gratitude we give you a book worth £25.
The deduction that you can make is:
| The value of the shares | £4,500 |
| less the amount the charity pays |
£2,000 |
| £2,500 | |
| less the value of the benefit received |
£25 |
| £2,475 |
Example 3
You have owned a second property for some years and decide to give it to Downing College.
A qualified property agent values the property at £90,000 and he is charged £400 for the valuation and other legal fees. The College gives you a painting worth £1,000 as a thank you.
The deduction that you can make is:
| The value of the property |
£90,000 |
| plus the valuation and legal fees | £400 |
| £90,400 | |
| less the value of the benefit received |
£1,000 |
| £89,400 |
Example 4
You are a higher rate taxpayer and have shares worth £100,000. If you sell them you would make a gain of £25,000 after all reliefs and allowances, and be liable for capital gains tax.
Option A
You sell the shares and give the proceeds to Downing under Gift Aid:
| Gross proceeds from sale | £100,000 |
| Less capital gains charge (£25k @ 40%) | £10,000 |
| Net proceeds after tax |
£90,000 |
Under Gift Aid Downing will recover £25,384 which when added to the gift will mean we receive £115,384 in total. You can reclaim tax at the difference between the higher and basic rates (18%) on the total gift (£115,384) so you get £20,769 from the Inland Revenue. So the total gift has cost you:
£100,000 - £20,769 = £79,231
Option B
You give the shares to Downing College:
| We sell the shares | £100,000 |
| You get tax relief at the higher rate (40%) | £40,000 |
| So the gift has cost you only | £60,00 |
These are illustrations only and we advise that you consult a professional financial advisor for further guidance according to your circumstances. Further information on giving shares, land and property can also be found on the Inland Revenue website (www.hmrc.gov.uk pdfs/ir178.htm).