Introduction Background Note
28.The clause and Schedule introduce new rules to block tax avoidance schemes that exploit the rules for tax relief on gifts of qualifying investments to charities. The legislation does not affect charities; it operates by restricting tax relief to a donor on gifts of qualifying investments to charities.
29.The avoidance depends on the donor receiving tax relief at their highest marginal rate of tax on the full market value of the qualifying investments at the date of the gift where:
	the donor acquired the investments at below market value as part of a scheme or arrangement; or
	the market value of the investment is artificially inflated at the date of the gift to charity.
30.The new rules adjust the amount of relief to the donor to the economic cost of acquisition of the gift to the donor where:
	the qualifying investment gifted to the charity (or anything from which the investment derives) was acquired within four years of the date of disposal; and
	the main purpose, or one of the main purposes, of acquiring the qualifying investment was to dispose of it to a charity and claim the tax relief.
31.The following examples show how the new rules are intended to work for individuals; the same principles apply for companies: