Gifts of land or buildings
Since April 2000 there have been generous income tax advantages for individuals who want to donate land or buildings to a UK charity. This means that donors can claim the current value of the land against their highest rate of marginal income tax as well as being free of any Capital Gains Tax on the property.
The relief works in the same way as for gifts of shares. To calculate the amount of tax relief, an individual should deduct the market value of the property from their taxable income for the tax year in which the donation is made (a tax year runs from 6 April to 5 April). The amount they can deduct is the market value of the property on the day of the gift plus any associated costs of transferring the property, such as solicitor's fees.
A donor gives a gift of a property which he bought for £80,000 but is now valued at £100,000. The solicitor's fee, paid by the donor to arrange the transfer, is £3,000. The tax deduction is calculated as follows:
|Original cost of property||£ 80,000|
|Current market value of property||£100,000|
|Solicitor's fee||£ 3,000|
|Deduction against income||£103,000|
Assuming the donor is paying income tax at the higher rate of 40%, their income tax bill will be reduced by (£103,000 @ 40%) £41,200. This effectively means that the donation of £100,000 will actually cost the donor just £61,800, after tax relief (£103,000-£41,200).
The donor will also save the Capital Gains Tax that should have been paid on the increase in the value of the property (from 80,000 to 100,000), which is £20,000. The current rate of Capital Gains Tax for individuals who pay above the basic rate of tax is 28%. Therefore, in effect, the donation has only cost them £35,600 (£41,200 - 28% of £20,000), which is less than half of the value of the gift.
Any land and buildings, whether freehold or leasehold, are eligible for relief provided the whole of the donor's interest in the property is given to the charity.
How to donate property to the Trust
If you are interested in making a property gift to the Trust, we would advise you to seek advice from your financial advisors.
Please contact the Development & OEA Office at firstname.lastname@example.org or on 0121 415 6055 to discuss how to make a gift of property to the Trust.