PART XIII MISCELLANEOUS SPECIAL PROVISIONS
C1CHAPTER VI OTHER PROVISIONS
Miscellaneous
F2C2C4587BF1Gifts of shares, securities and real property to charities etc
1
Subsections (2) and (3) below apply where, otherwise than by way of a bargain made at arm’s length, an individual, or a company which is not itself a charity, disposes of the whole of the beneficial interest in a qualifying investment to a charity.
2
On a claim made in that behalf to an officer of the Board—
a
the relevant amount shall be allowed—
i
in the case of a disposal by an individual, as a deduction in calculating his total income for the purposes of income tax for the year of assessment in which the disposal is made;
ii
in the case of a disposal by a company, as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and
b
no relief in respect of the disposal shall be given under section 83A F15of this Act, section 108 of ITTOIA 2005 or any other provision of the Income Tax Acts;
but paragraph (a)(i) above shall not apply for the purposes of any computation under F16sections 535 to 537 of ITTOIA 2005.
3
The consideration for which the charity’s acquisition of the qualifying investment is treated by virtue of section 257(2) of the 1992 Act as having been made—
a
shall be reduced by the relevant amount; or
b
where that consideration is less than that amount, shall be reduced to nil.
F74
Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—
a
where the disposal is a gift, the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever time gives the lower value);
b
where the disposal is at an undervalue, the amount by which—
i
the value described in paragraph (a) above, exceeds
ii
the amount or value of the consideration for the disposal,
or, if there is no such excess, nil.
5
Where there are one or more benefits received in consequence of making the disposal which are received by the person making the disposal or a person connected with him, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.
6
Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it.
7
Where the disposal is at an undervalue—
a
to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it; and
b
section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain.
8
In the case of a disposal by a company which is carrying on life assurance business—
a
if the company is charged to tax under Case I of Schedule D in respect of such business, subsections (2) and (3) above shall not apply;
b
if the company is not so charged to tax in respect of such business—
i
subsection (2)(a)(ii) above shall have effect as if for “a charge on income" there were substituted F14“expenses payable falling to be brought into account at Step 3 in section 76(7)”; and
ii
the relevant amount given by subsection (4) above shall be reduced by so much (if any) of that amount as is not referable to basic life assurance and general annuity business;
and for the purpose of determining how much (if any) of that amount is not so referable, section 432A shall have effect as if that amount were a gain accruing on the disposal of the qualifying investment to the company.
F88A
The value of the net benefit to the charity is—
a
the market value of the qualifying investment, unless subsection (8B) below applies;
b
where that subsection applies, that market value reduced by the aggregate amount of the related liabilities of the charity (see subsections (8E) to (8G)).
8B
This subsection applies in any case where—
a
the charity is, or becomes, subject to an obligation to any person (whether or not the person making the disposal or a person connected with him), and
b
one or more of the conditions in subsection (8C) below is satisfied.
8C
For the purposes of subsection (8B) above—
a
condition 1 is that, taking into account all the circumstances (including, in particular, the difference in the value of the net benefit to the charity if subsection (8B) applies and if it does not), it is reasonable to suppose that the disposal of the qualifying investment to the charity would not have been made in the absence of the obligation;
b
condition 2 is that the obligation (whether in whole or in part) relates to, is framed by reference to, or is conditional on the charity receiving, the qualifying investment or a related investment (see subsection (8D)).
8D
In subsection (8C) above “related investment” means any of the following—
a
any asset of the same class or description as the qualifying investment (irrespective of size, quantity or amount);
b
any asset derived from, or representing, the qualifying investment whether in whole or in part and whether directly or indirectly;
c
any asset from which the qualifying investment is derived, or which the qualifying investment represents, whether in whole or in part and whether directly or indirectly.
8E
For the purposes of this section, the liabilities which are related liabilities in the case of any qualifying investment are the liabilities of the charity under each of the obligations that fall within subsection (8B) above (as read with subsection (8C) above) in relation to that investment.
8F
Where an obligation is contingent and the contingency occurs, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, under the obligation is the amount or value of the liability actually incurred in consequence of the occurrence of the contingency.
8G
Where an obligation is contingent and the contingency does not occur, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, is nil.
9
In this section—
“authorised unit trust” and “open-ended investment company” have the meanings given by section 468;
“charity” has the same meaning as in section 506 and includes each of the bodies mentioned in section 507(1);
“the incidental costs of making the disposal to the person making it” shall be construed in accordance with section 38(2) of the 1992 Act;
“life assurance business” and related expressions have the same meaning as in Chapter I of Part XII;
F9“obligation” includes a reference to each of the following—
- a
any scheme, arrangement or understanding of any kind, whether or not legally enforceable;
- b
a series of obligations (whether or not between the same parties);
- a
F10“offshore fund” has the same meaning as in Chapter 5 of Part 17;
“qualifying investment” means any of the following—
F11“related liabilities” shall be construed in accordance with subsection (8E) above;
F12“value of the net benefit to the charity” shall be construed in accordance with subsection (8A) above.
F59A
In this section a “qualifying interest in land” means—
a
a freehold interest in land, or
b
a leasehold interest in land which is a term of years absolute,
where the land in question is in the United Kingdom.
This subsection is subject to subsections (9B) to (9D) below.
9B
Where a person makes a disposal to a charity of—
a
the whole of his beneficial interest in such freehold or leasehold interest in land as is described in subsection (9A)(a) or (b) above, and
b
any easement, servitude, right or privilege so far as benefiting that land,
the disposal falling within paragraph (b) above is to be regarded for the purposes of this section as a disposal by the person of the whole of his beneficial interest in a qualifying interest in land.
9C
Where a person who has a freehold or leasehold interest in land in the United Kingdom grants a lease for a term of years absolute (or, in the case of land in Scotland, grants a lease) to a charity of the whole or part of that land, the grant of that lease is to be regarded for the purposes of this section as a disposal by the person of the whole of the beneficial interest in the leasehold interest so granted.
9D
For the purposes of subsection (9A) above, an agreement to acquire a freehold interest and an agreement for a lease are not qualifying interests in land.
9E
In the application of this section to Scotland—
C3a
references to a freehold interest in land are references to the interest of the owner,
b
references to a leasehold interest in land which is a term of years absolute are references to a tenant’s right over or interest in a property subject to a lease, and
c
references to an agreement for a lease do not include references to missives of let that constitute an actual lease.
10
Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.
F1310A
Section 839 (connected persons) applies for the purposes of this section.
11
In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of the 1992 Act (meaning of “market value” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.
F612
This section is supplemented by section 587C below.
Pt 13 Ch. 6: ss. 573, 575 and 576 transposed to Pt. 13 Ch. 5A (6.4.2007 with effect in accordance with s. 1034(1) of the affecting Act) by Income Tax Act 2007 (c. 3), Sch. 1 paras. 117(3), 119(7), 120(7) (with Sch. 2)