In general, donation is not subject to capital gain/loss and is entitled to income tax relief when the donor does not receive anything for return. However, there are two exceptions:
Where the individual sells the tokens to the charity for more than the acquisition cost, it will result in capital gain that is taxable and subject to capital gains tax.
An individual makes arrangements with a charity to get some form of kickback/financial advantage. Where all 3 conditions below are satisfied, the donor loses any tax relief that they would have been entitled to claim, had the donation not been tainted. You may refer to the HMRC website for more information on tainted donations.
The donation to the charity and arrangements entered into by the donor are connected.
The main purpose of entering into the arrangements is for the donor, or someone connected to the donor, to receive a financial advantage directly or indirectly from the charity.
The donation isn’t made by a qualifying charity-owned company or relevant housing provider linked with the charity to which the donation is made.
For more information on tax relief on donations, you may refer to the HMRC website.
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