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Gifts to Charity, CASCs & Bodies for a National Purpose
Relief from capital gains tax is given in respect of disposals of assets to the bodies below when the recipient pays less than the allowable CGT costs of acquisition for the cryptoasset, providing it is not a tainted donation:
- a community amateur sports club (CASC), or
- a body for a National Purpose (ie British Museum)
Where this relief applies, the disposal is treated as being made for no gain and no loss. Therefore the disposal proceeds are deemed to equal the allowable CGT costs.
There is no relief if it is a ‘tainted donation’ (see below) or when the recipient pays the donor more than the allowable CGT costs.
The recipient can pay an individual donor up to the acquisition cost of the cryptoasset and the donor will not realise a capital gain on the disposal (as it is treated as a disposal at no gain and no loss). Therefore it does not need to be an outright gift to the charity.
If the consideration given by the recipient, though not full market value, is nevertheless greater than the allowable costs, the disposal is treated as made for the actual consideration given (rather than the full market value at the date of disposal) and the resultant capital gain will be chargeable.
UK income tax reliefs were extended to charities based in the European Economic Area in 2010 (so charities based in the UK, Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Iceland, Liechtenstein and Norway).
The definition of a charity is a body of persons or a trust that is:
- solely established for a charitable purpose;
- under the jurisdiction of the UK courts or the courts in a relevant territory;
- compliant with the registration conditions in the UK (register of charities) or a similar requirement in the relevant territory; and is
- managed by fit and proper persons.
Charities established in England and Wales must satisfy the definition in the Charities Act 2011. A ‘charity’ is established for charitable purposes and is subject to the control of the High Court’s charity-law jurisdiction.
- prevention or relief of poverty;
- advancement of:
- education;
- religion;
- health or the saving of lives;
- citizenship or community development;
- the arts, culture, heritage or science;
- amateur sport;
- human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
- environmental protection or improvement;
- relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage;
- advancement of animal welfare;
- promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services; and
- any other purposes reasonably analogous to the above.
Charitable purposes also extend to recreational (i.e. CASCs) and similar trusts and those that under the previous definition are within the spirit of the new definition of charitable purposes.
Purposes that are not for public benefit cannot be charitable purposes. The requirement is that the purpose must benefit the public generally (or a sufficient section of the public) and not give rise to more than incidental personal benefit. The purpose must be beneficial, and any detriment or harm must not outweigh the benefit.
Relief from CGT is not available where a person makes a 'tainted donation', or any associated donation. In order to be tainted, a donation must meet all three conditions below:
- The donor, or a person connected with him (both known as a linked person), makes arrangements (whether before or after the donation is made) and it is reasonable to assume that the donation and arrangements would not have been made or entered into independently of each other
- The main purpose, or one of the main purposes, of entering into the arrangements is that the linked person (other than a charity) obtains a financial advantage either directly or indirectly from the charity that received the donation, and
- The donor is not a qualifying charity-owned company, or a relevant housing provider linked with the charity to which the donation is made.
Donations of cryptoassets do not qualify for the gift aid income tax relief and any other income tax relief.
Income tax relief is only available for donations of fiat currency or certain other assets (shares, listed securities, property) to UK/EU/EEA qualifying charities as per the definition above.
Recap has been designed from the ground up to work out the capital gains impact of gifting cryptoassets to charity.
- 1.Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.
- 2.Recap treats gifts to charity as a no gain/no loss disposal
- 3.See the tax impact of every gift (example below) in the tax tab or download a PDF tax report
Last modified 1yr ago