If you give shares or property to a UK charity, or sell them to it for less than they are worth, there is normally no Capital Gains Tax on the disposal, and for listed shares, fund units and UK freehold or leasehold property you can also deduct the value of the gift from your taxable income. The income tax relief comes from Chapter 3 of Part 8 of the Income Tax Act 2007 and the Capital Gains Tax relief from section 257 of the Taxation of Chargeable Gains Act 1992. Together they often make a gift of an asset worth more to the donor than selling it and giving the cash.

How does a gift to charity avoid Capital Gains Tax?

A gift is normally treated as a disposal at market value, so giving away an asset that has grown in value creates a taxable gain even though you receive nothing. Section 257 TCGA 1992 switches this off for disposals to a charity made otherwise than under a bargain at arm’s length. Where the disposal is a gift, or a sale for no more than your allowable costs, it is treated as made for an amount that gives neither a gain nor a loss, and the charity is treated as acquiring the asset when you did.

GOV.UK confirms that you do not have to pay Capital Gains Tax on property or shares you give to charity. Section 257 applies to any asset, not just the investments that qualify for income tax relief, so a gift of unlisted shares, a painting or business equipment to a charity also avoids Capital Gains Tax. The same section also covers registered clubs and the national bodies listed in Schedule 3 to the Inheritance Tax Act 1984.

A sale at undervalue is different if the price is more than your cost. GOV.UK says you may have to pay Capital Gains Tax if you sell for more than the asset cost you but less than its market value, and the gain is worked out using the amount the charity actually pays rather than the market value.

Which assets also qualify for income tax relief?

Section 432 ITA 2007 defines a qualifying investment as:

  • shares or securities listed on a recognised stock exchange or dealt in on a designated UK market, which HMRC’s charities guidance says includes the Alternative Investment Market;
  • units in an authorised unit trust;
  • shares in an open ended investment company;
  • an interest in an offshore fund;
  • a qualifying interest in UK real property, meaning a freehold interest or a leasehold interest for a term of years absolute.

Shares in an unlisted private company, chattels and overseas property are outside the list. A gift of those can still avoid Capital Gains Tax under section 257, but gives no income tax deduction. GOV.UK also notes that there is no income tax relief on donations to community amateur sports clubs.

Section 431 requires the individual to dispose of the whole of the beneficial interest in the investment to a charity, otherwise than by way of an arm’s length bargain, and to make a claim.

How much income tax relief do I get?

The relief is a deduction in calculating your net income for the tax year in which you make the disposal (section 431(2), Step 2 of the calculation in section 23). HMRC’s detailed guidance for charities, Chapter 5, sets out the relievable amount for an outright gift as the net benefit to the charity, normally the market value, plus incidental costs such as broker or legal fees, less the value of any benefit you or a connected person receive because of the gift.

HMRC’s examples show how this works:

  • Angela gives 5,000 listed shares worth £10 each, pays a broker’s fee of £50 and receives event tickets worth £500. Her deduction is £50,000 plus £50 less £500, which is £49,550.
  • John sells 1,000 shares worth £4.50 each to a charity for £2 each and receives a book worth £25. His deduction is £4,500 less £2,000 less £25, which is £2,475.
  • George gives a second property valued at £90,000, pays £400 in valuation and legal fees and receives a painting worth £1,000. His deduction is £89,400.

What extra conditions apply to property?

Chapter 5 of HMRC’s charities guidance explains that for buildings and other real property:

  • you must obtain a certificate from the charity describing the property, giving the date of disposal and stating that the charity has acquired it (section 441 ITA 2007);
  • you must give the whole of your beneficial interest, and if the property is jointly owned, all the owners must give their interests if any of them is to claim, with the relief shared as they agree;
  • giving your house to a charity while continuing to live in it until you die does not qualify, because you have not given the whole of your beneficial interest;
  • granting a lease to a charity rent free or below market rent is treated as disposing of the whole beneficial interest, even if you keep the freehold;
  • relief can be withdrawn if you, or a person connected with you, becomes entitled to an interest or right in the property within a set period, which for individuals ends on the fifth anniversary of the normal Self Assessment filing date for the tax year of the gift, unless the interest is acquired for full consideration or on a death.

A professional valuation is usually needed and its cost can be added to the relief. After the gift, HMRC can check your valuation before you claim, but will not value the property for you.

When is the gift treated as made?

The date fixes both the market value used and the tax year of the relief. HMRC’s guidance says it is the date the investments are transferred to the charity. For shares this is likely to be the date you sign and hand over the stock transfer form, or for shares held in CREST, the date you give your broker written instruction to transfer them irrevocably. For property it is normally the date of conveyance, but if the gift is under a contract it is the contract date, or the date all conditions are satisfied if the contract is conditional.

Keep a dated copy of the transfer form or other document irrevocably giving the investments away, because the register may not change until later.

Should I give the asset or sell it and give the cash?

If you sell first, you make a taxable disposal at market value and the cash gift then goes through Gift Aid. HMRC’s guidance notes that a charity can claim Gift Aid on a gift of money but not on a gift of an asset, and that giving the shares is generally simpler than selling them and giving the cash.

Illustration only. Sarah owns listed shares that cost £4,000 and are now worth £20,000. If she gives the shares directly and pays a £100 broker’s fee, the £16,000 gain is not taxed and she deducts £20,100 from her income. If she sells first, she has a £16,000 gain to report, reduced only by any unused annual exempt amount, before giving the cash, and the tax on it depends on the Capital Gains Tax rates that apply to her.

A charity may ask you to sell the shares for it. You can do this and still claim, but GOV.UK and HMRC’s guidance say you must keep evidence, such as an exchange of letters, that you gave the shares to the charity and it asked you to sell on its behalf. Without it, you may be treated as selling on your own account, with a Capital Gains Tax charge and the cash treated as a Gift Aid donation.

What does the charity’s base cost become?

Section 257(2A) and (2B) reduce the charity’s base cost by the donor’s relievable amount, whether or not the donor actually claims the relief. HMRC’s guidance gives the example of shares costing £2,000, worth £4,500 and sold to a charity for £2,000. The donor’s relievable amount is £2,500, which exceeds the original cost, so the charity’s base cost is nil. HMRC’s guidance adds that a gain the charity applies for charitable purposes is exempt, so the reduced cost rarely creates a charge, but it explains the figures in a charity’s records.

How do I claim, and what can go wrong?

If you complete a Self Assessment return, the deduction goes in the charitable giving section. Otherwise you can ask HMRC to adjust your tax code or, according to HMRC’s guidance, to reduce your payments on account, or write to HMRC with details of the gift. Outright gifts to charity are also free of Inheritance Tax.

Common problems are:

  • selling the shares yourself and giving the proceeds, which loses the Capital Gains Tax relief;
  • forgetting to deduct benefits received, such as event tickets or memberships, from the relief;
  • giving only part of a property, or keeping a right to occupy it;
  • expecting income tax relief on unlisted company shares;
  • using the price on the date the registrar processes the transfer rather than the date of the gift.

Anti avoidance rules also apply. Where an investment was acquired as part of a scheme within four years before the gift and the purpose was to obtain relief, the relief is limited to the lower of market value and what you paid. Section 431(7) also makes the relief subject to the tainted charity donations rules. For donations through your employer, see payroll giving.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.