Last updated: 14 October 2026
What are the tax implications of selling land to a charity below market value?
A sale to a charity at undervalue is treated favourably. For CGT, a disposal to a charity is treated as no gain, no loss if the price is at or below your original cost, so there’s no CGT. If the price is above your cost but below market value, you’re taxed only on the actual gain made. On top of that, individuals can claim income tax relief on the gift element (the market value less the price), and companies get corporation tax relief. The gifted element is also exempt from inheritance tax.
How the reliefs work
| Tax | Effect of a sale at undervalue to a charity |
| CGT | Gain limited to actual proceeds less cost; no gain if price at or below cost |
| Income tax relief (individual) | Market value less price received, plus incidental costs, deducted from income |
| Corporation tax (company) | Gift element deductible as a qualifying charitable donation |
| IHT | Gifts to charity are exempt |
| SDLT (charity buyer) | Charities relief usually exempts the purchase |
Conditions for income tax relief
- The charity must be a UK registered charity (or certain equivalents)
- The land must be UK land, a qualifying interest such as freehold or a long lease
- You need a certificate from the charity confirming the gift
- Joint owners must all dispose of their interests
Example
Peter owns a field bought for £30,000, now worth £200,000. He sells it to a local wildlife charity for £50,000. His CGT gain is £20,000 (£50,000 less £30,000), not the £170,000 he would have made on an open-market sale. He can also claim income tax relief on £150,000 (£200,000 less £50,000), which as a 45% taxpayer could save him up to £67,500 in income tax over the year. The field is also outside his estate for IHT.
Valuation
You need a professional valuation at the date of the sale. HMRC’s Shares and Assets Valuation team may check it. Overvaluing can lead to penalties.
Benefits of selling rather than gifting
Selling at undervalue lets you take some cash while still giving most of the value. A straight gift of land gives full income tax relief on market value with no CGT at all.
Companies
A company selling land to a charity at undervalue gets relief on the gift element as a qualifying charitable donation, and the chargeable gain is calculated on the actual proceeds.
Common mistakes
- Not getting a proper valuation
- Forgetting the charity’s certificate
- Assuming relief can be spread over several years (it’s claimed in the year of disposal)
- Overlooking clawback if the arrangement isn’t genuine
Records to keep
Keep the sale contract, valuation report, charity certificate and land registry documents.
Agreeing terms with the charity
Agree the price and the charity’s plans for the land in writing before exchange. If you keep any right to use the land, such as grazing, relief may be restricted, so make sure the charity takes full ownership.
Frequently asked questions
Can the relief exceed my income?
No, relief is limited to income for the year.
Is there a cap on reliefs?
Gifts to charity aren’t subject to the £50,000 cap.
Does it work for buildings too?
Yes, land includes buildings.
What about Scottish land?
Same UK rules apply.
Related: donations to a youth club, service discounts to charities and contacting HMRC about IHT.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with charitable gifts of land. See our inheritance tax planning service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
