Charities will often hold assets such as land and property or investments which are chargeable assets and which, when sold, may realise a capital gain or a capital loss.

Charities are exempt from CGT if the gain accrues to a charity and is both applicable and applied for charitable purposes. This includes use of funds for the general administrative purposes of the charity. Capital losses arising in circumstances where a gain would be exempt are not available for relief.

See this HMRC guidance for further information.

Loss of charitable status

Trustees can find themselves with a potential charge to CGT in certain circumstances where property ceases to be subject to charitable trusts or ceases to be used for charitable purposes, for example where a school or museum is closed.

Temporary loss of charitable status

Specific tax problems can arise where land or buildings used for charitable purposes are held on terms under which the property may revert to the donor. This again could result in a potential charge to CGT; but there is a concession which allows for any CGT to be discharged or repaid providing charitable status is re-established within six years of the original reversion date.