How does the tax relief work

If you are a UK taxpayer and choose to make a gift of shares to WaterAid you are entitled to claim back full tax relief against the value of those shares. For example, the real cost to a higher-rate taxpayer of a gift of shares worth £1000 to WaterAid is just £600, or to a basic-rate taxpayer only £780. Furthermore, no capital gains tax will apply*.

You are entitled to claim tax relief equal to the market value of the shares on the day you make the gift, together with any associated costs such as broker's fees.

For example, if you give WaterAid 500 shares in a listed company, each worth £4 on the day the gift is made, the value of your gift will be £2000. If your broker's fee is a further £50, this means you are entitled to a total deduction against income of £2050. In this example, therefore, if you are a higher-rate (40%) taxpayer, you will pay £820 less in income tax this year, meaning that the actual cost to you of a £2000 donation to WaterAid could be just £1230.

Tax relief is available to UK taxpayers who donate shares and securities listed on the UK Stock Market, the Alternative Investment Market, and recognised stock exchanges overseas. It is also available for units in a UK unit trust, shares in a UK open-ended investment company (OEIC), and some similar foreign investments. Full details are available from the Inland Revenue (see the FAQs for contact details).

You may wish to donate back to WaterAid the tax relief on your gift of shares. This can be done very simply under a new scheme that allows you to donate to charity, via your Self Assessment tax return, any tax repayment due to you that year (see the FAQs for contact details).

It is very important to bear in mind that it is your responsibility to retain evidence of the details of your share gift and the date it was made, in order to claim tax relief. For further details of how to go about claiming tax relief on a charitable gift of shares, please refer to our FAQs.

*Although you will not have to pay capital gains tax (CGT) on any increase in the value of the shares since they were bought, if the shares have gone down in value, the loss cannot be offset against any other CGT liability.