Gifts of shares

If you are a higher or additional rate tax payer and you own shares or units of an authorized unit trust which show a capital gain, a gift of shares or units to the AAM could cost you well under 50% of its eventual value to us: the gross value of a gift of shares to the AAM can be offset against your taxable income, and no capital gains tax is payable on those shares.

Example

Your marginal tax rate is 40%. You own shares worth £1,000 with a cost of £500. You have already used up all your capital gains tax allowance this year. If you sold the shares to use the proceeds for your own purpose the amount available after payment of capital gains tax of £140 (28% of £500) would be £860. Instead of spending the money on yourself, you make a gift of these shares to the AAM. The AAM sells the shares and the gift in our hands amounts to £1,000 (less dealing costs). At the end of the tax year you are able to offset the gross sum of £1,000 against your income tax liability and you will receive a rebate of £400. Thus you have made a gift which is worth in the hands of the charity £1,000, but which has cost you only £460. 

The mechanics

Your investment manager or broker will be able to advise on the mechanics of making the transfer of shares. A simple method is for you to sell the shares on behalf of the AAM: you write to us saying that you are making the gift, stating the number of shares and the current market value; we reply saying that we accept this gift in the form of shares; we ask you in the letter to sell the shares on our behalf; and we give instructions where the proceeds should be sent. It is important that you are able to provide evidence of the gift of shares for your Tax Office: the Inland Revenue suggests that you might like to confirm the process with your Tax Office (see section 5.3.5 of www.inlandrevenue.gov.uk). Your accountant will be able to advise both on the exact saving that may be made and on the documentation that your tax office will require. We have pro forma letters available to facilitate the process outlined above.