Capital gains tax relief example
This example is simplified to act as an illustration of the tax efficiency. It does not take into account indexation allowance, taper relief, business assets or non-business assets etc – all of which may be relevant and you should consult your adviser/accountant for a fuller picture.
Assume £10,000 of shares, which cost the donor £5,000 to acquire, are gifted to The Children's Society and The Children's Society sell them for £10,000.
If sold, the donor would get £10,000 less £2,000 (capital gains tax on the gain of £5,000) – ie the donor would receive £8,000.
If gifted to The Children's Society the donor will be able to get relief on the full £10,000 at 50% (this is the highest rate of income tax if applicable)
In summary, if the donor were to sell the shares, they would get £8,000 – if the shares were given to The Children's Society the donor would get £4,000 in income tax relief ie the actual cost to the donor is £4,000 of lost revenue for a gift to The Children's Society worth £10,000.