Q. What are the tax implications of selling land to a charity at below market value?
A. I’d like to sell some land I own to a local dogs charity. I believe the land is probably worth over £500,000, but I’m willing to sell it for £100,000. I am not connected to the charity in any way. Please can you explain the tax implications to me?
Arthur Weller replies:
If the land was originally acquired for less than £500,000, ordinarily there would be capital gains tax (CGT) to pay, but if this charity is a registered charity, there is no CGT to pay. Furthermore, since the charity is benefiting by £400,000, you may be able to claim income tax relief in the tax year of donation. See HMRC’s Capital Gains Manual at CG66630.
