What tax relief does section 431 of the Income Tax Act 2007 provide?

Section 431 provides income tax relief for individuals who donate qualifying investments — such as listed shares, listed securities or interests in land — to charity. The relief takes the form of a deduction from net income for the tax year in which the disposal takes place, reducing taxable income before the personal allowance is applied.

How is the relievable amount calculated under section 431?

The relievable amount is calculated under section 434 of the Income Tax Act 2007. It broadly takes into account the market value of the qualifying investment at the date of disposal, less any consideration received by the donor and any costs or benefits connected with the disposal. This amount is then deducted at Step 2 of the income tax calculation under section 23.

What additional conditions apply when donating an interest in land to charity under section 431?

When the qualifying investment is an interest in land, the charity must provide a certificate confirming the transaction under section 441. Special rules apply to jointly held land under section 442, and section 443 adjusts the relievable amount for joint disposals. Section 444 identifies disqualifying events, such as the donor reacquiring an interest in the land, which can cause relief to be withdrawn.

Can the relief under section 431 be denied or restricted?

Yes. The relief may be denied where the donation is a tainted charity donation under the anti-avoidance rules in section 809ZM, which apply where arrangements exist for the donor or a connected person to receive a financial advantage from the charity. Additionally, relief under this chapter is disregarded when calculating top slicing relief on life assurance gains under section 535 of ITTOIA 2005.

Income Tax Act 2007 section 431

Relief for gifts of shares, securities and real property to charities etc.

Section 431 provides income tax relief for individuals who donate qualifying investments — such as shares, securities or real property — to charity.

An individual who gives away their entire beneficial interest in a qualifying investment to a charity, other than through an arm's length bargain, can claim a deduction against their net income for the tax year of the disposal
The relievable amount is calculated in accordance with the rules in section 434 and is deducted at Step 2 of the income tax calculation set out in section 23
Where the qualifying investment is an interest in land, additional requirements apply, including the need for a charity certificate, special rules for jointly held land, adjusted calculations for joint disposals, and provisions dealing with disqualifying events
The relief may be denied where the donation is a tainted charity donation, and is disregarded when calculating top slicing relief on life assurance gains

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