Against a background of growing fiscal pressure, the Chancellor delivered a Budget aimed at 'putting the public finances on a sustainable path'.
While Income Tax thresholds and employee National Insurance contributions were left unchanged, the Budget contained various changes to Capital Gains Tax (CGT) and Inheritance Tax (IHT) which provide further incentives for non-cash giving and charitable legacies.
Consider funding your generosity with shares
The rates of CGT on share sales and other non-residential property assets were increased from 10% and 20% to 18% and 24%. In combination with the reduction in the Annual Exempt Amount (AEA) from £12,300 in 2022-2023 to £3,000 in 2024-2025, this rate uplift means that those selling shares face a significantly increased tax burden.
Example: Carol, who is a higher rate taxpayer, buys listed shares for £20k and later sells them for £40k, making a capital gain of £20k.
If Carol had sold the shares on 6 April 2022, she would have deducted her AEA of £12,300 and paid tax at 20% of £7,700, leaving a CGT bill of £1,540.
If Carol had sold the shares on 6 April 2024, she would have deducted her AEA of £3,000 and paid tax at 20% of £17,000, leaving a CGT bill of £3,400.
If Carol sells the shares on or after 30 October 2024, she will deduct her AEA of £3,000 and pay tax at 24% of £17,000, leaving a CGT bill of £4,080.
If you own shares which are standing at a gain, why not consider using these to fund your charitable giving? A gift of shares to charity is exempt from CGT and, if the shares are a qualifying investment, you can deduct the market value of the shares from your taxable income, achieving Income Tax relief at your marginal rate.
Example: As above, but Carol gives the shares to charity. Carol pays no CGT on the gain and can deduct £40k from her taxable income, achieving Income Tax relief of £16,000 at her marginal rate of 40%.
Stewardship can help to facilitate share gifts in support of your favourite cause using a simple exchange of letters process. For more information, please contact us.
Opportunity to give on the sale of your business
Investors’ Relief and Business Asset Disposal Relief offer a lower rate of CGT for investors disposing of shares in unlisted trading companies or individuals disposing of their own business.
This special CGT rate is currently 10%, but it will rise to 14% from 6 April 2025 and match the main lower CGT rate of 18% from 6 April 2026. The lifetime limit for Investors’ Relief has also been reduced from £10m to £1m with immediate effect.
If you’re an SME owner or investor, the upcoming tax rate increases may have caused you to consider a business exit. If so, we’d love to help you take this opportunity to set aside part of the proceeds in a Stewardship Donor Advised Fund or Philanthropy Fund to fund your future giving plans. We’ll even be able to claim Gift Aid on your gift of sale proceeds and so reclaim some or all of the CGT you’ll pay on your business exit. For more information, please contact us.
Expanded IHT scope provides more incentive to leave a charitable legacy
The IHT Nil Rate Band (tax-free amount) has been frozen at £325,000 since 2009 and this freeze has now been extended until 2030. The Chancellor also announced changes to Agricultural and Business Property Relief, making these reliefs less generous from April 2026. Perhaps most surprisingly, unused pension funds and death benefits will be brought into the scope of IHT from 6 April 2027.
The combined impact of these changes is that many more estates will be brought into the scope of IHT or will face higher IHT bills. If you’re affected by these changes, you may wish to consider leaving a tax-free charitable legacy
We will continue to monitor the pension IHT changes as draft legislation is published and we’re liaising with sector bodies to ensure that the new rules continue to incentivise generosity. To keep updated on this and other philanthropy topics, why not subscribe to our quarterly Impact newsletter?
Don’t forget your higher/additional rate Gift Aid reclaim
The Chancellor announced that Income Tax thresholds will be uprated in line with inflation from 2028. However, freezing these thresholds from 2022 to 2028 has brought 3 million more taxpayers into higher rate Income Tax (68% increase) and 400,000 more into additional rate Income Tax (49% increase). If you’re one of those affected, are you reclaiming your higher/additional rate Gift Aid, worth 25p/31.25p for every £1 you’ve given?
Find out more
To learn more about the impact of the Autumn Budget 2024 on your favourite causes, see Autumn Budget 2024 – What’s in it for charities?
Organising all of your charitable giving with a Stewardship account makes it easy to find the information you need for your higher/additional rate Gift Aid reclaim. Please get in touch if you would like to find out more.
Stewardship may provide general guidance about charitable giving for information purposes only. We do not offer tax, legal or investment advice and you are encouraged to seek advice from a qualified professional on your specific situation. Read our full investment disclaimer.
Impact
Quarterly email for philanthropists. News, inspiration and guidance to support you on your giving journey.
Rachel Steeden
Rachel is a solicitor with 17 years’ experience advising private clients and charities. She enjoys working closely with clients and their advisers to help donors make complex gifts effectively and tax-efficiently.
She is a member of the Charity Law Association, STEP Special Interest Group for Philanthropy, Lawyers in Charities and Lawyers’ Christian Fellowship. She is also on CityWealth's prestigious Top 10 Philanthropy Advisors 2024 list.
Rachel and her husband Derek lead a Bible study group at their church in central London.
They’re passionate about Church Planting in the UK and overseas, Bible translation and The Local Church.
