Tax relief on charitable donations

Many people give to charity because they want to support a cause. The tax rules can make the gift go further, but only if the donation is made in the right way and the donor has paid enough UK tax.

This note explains the main UK tax reliefs for individuals making charitable gifts. It covers cash donations under Gift Aid, donations through payroll, and gifts of shares or land.

The main point

For most cash donations, the easiest route is Gift Aid. If you give £100 under Gift Aid, the charity can normally claim a further £25 from HMRC. The charity receives £125 in total, but you have paid £100.

The charity gets this extra amount because Gift Aid treats your £100 as the after-tax part of a larger gift. The tax already treated as paid is added back by HMRC and paid to the charity.

A potential trap to watch out for

Gift Aid is not available simply because you sign a form. You must have paid enough UK Income Tax or Capital Gains Tax for the tax year to cover the amount reclaimed by all the charities and registered amateur sports clubs you have supported under Gift Aid.

A simple way to check this is that your Gift Aid donations should not be more than four times the UK Income Tax and Capital Gains Tax you have paid for that tax year.

This point is often missed by people with low taxable income, tax-free savings income, tax-free dividends, losses, pension contributions, or other reliefs. If HMRC finds that the charity has reclaimed more tax than you have paid, HMRC can ask you to pay the difference.

What basic rate taxpayers get

If you only pay tax at 20%, Gift Aid normally gives you the correct tax relief automatically. The charity claims the extra 25p for every £1 you donate. You do not usually get a further personal tax relief.

What higher and additional rate taxpayers can claim

If you pay tax at 40% or 45%, you can normally claim extra tax relief. The charity still receives the same Gift Aid repayment from HMRC, but you can claim further relief personally.

For example, if you give £100 under Gift Aid, the charity receives £125. A 40% taxpayer can normally claim an extra £25. A 45% taxpayer can normally claim an extra £31.25.

You can claim the extra relief through your Self Assessment tax return. If you do not complete a tax return, you can usually contact HMRC and ask for your tax code to be adjusted.

For 2026/27, the standard Personal Allowance is £12,570. For taxpayers in England, Wales and Northern Ireland, the 20% tax band is generally £37,700 of taxable income after allowances, 40% applies above that up to £125,140, and 45% applies above £125,140. Gift Aid effectively increases the amount of income taxed at the lower rates.

Scottish taxpayers have different tax rates on earnings, pensions and most other non-savings income. The charity still claims Gift Aid based on the 20% UK basic rate, but the personal tax relief can differ if you pay Scottish rates above 20%.

Gift Aid can also affect income-based tax charges

Gift Aid can reduce the income figure used for some tax calculations. This can matter where your income is above £100,000 and your Personal Allowance is being withdrawn. It can also matter for the High Income Child Benefit Charge, which starts when adjusted income is above £60,000.

For this purpose, every £1 you give under Gift Aid normally reduces the relevant income figure by £1.25. This can make Gift Aid more valuable than the standard higher rate or additional rate relief in some cases.

The Gift Aid declaration

The charity must have a Gift Aid declaration from you. This can be made on paper, online, by text, by email, by phone or in person.

The declaration normally confirms your name, address, the charity, and that you want the donation to be treated as a Gift Aid donation. A declaration can cover current donations, future donations and donations made in the last four years.

You should tell the charity if you stop paying enough UK tax. This can happen, for example, after retirement, after a move abroad, after a large pension contribution, or in a year with lower income.

Carrying a donation back to the previous tax year

In some cases, a donation made after the end of a tax year can be treated as if it was made in the previous tax year. This can be useful if you paid higher rate tax in the earlier year, or if you want the tax relief sooner.

The timing is strict. The donation and the claim must be made before the tax return for the earlier year is filed and before the filing deadline for that return. A first claim, or an increased claim, cannot normally be made later by amending the tax return.

For example, a Gift Aid donation made after 5 April 2026 may be carried back to 2025/26 only if the conditions are met before the 2025/26 tax return is filed and before the filing deadline.

Benefits received from the charity

A donation may fail to qualify for Gift Aid if you, or someone connected with you, receives a valuable benefit because of the donation. A small thank-you gift or modest benefit can be acceptable, but there are limits.

Admission to charity property can be a special case. For example, an annual right of admission can often be ignored for this purpose, and a one-off visit can sometimes qualify if the donation is at least 10% more than the normal admission price. The details should be checked where admission rights, tickets or membership benefits are involved.

Subscriptions and memberships

A payment is not automatically a Gift Aid donation just because some of it eventually goes to charity. If you pay a subscription to an organisation that is not itself a charity, and that organisation later passes part of the money to charity, your subscription will not usually qualify.

A membership payment to a charity itself may qualify, but only if the personal benefits are limited. If the payment gives you normal commercial use of facilities or services, it should not be assumed to qualify for Gift Aid.

Donating through payroll

Some employers and pension providers offer Payroll Giving. Under this method, your donation is taken from pay or pension before Income Tax is calculated. This means you receive the tax relief immediately through payroll.

Payroll Giving is different from Gift Aid. The charity does not claim the 25p per £1 Gift Aid amount, but you do not pay Income Tax on the amount you give. National Insurance is still calculated in the normal way.

Giving shares, funds or land

There can also be Income Tax relief where you give certain listed shares, securities, authorised funds, land or buildings to a charity. This relief is different from Gift Aid.

The relief is normally based on the market value of the asset when it is given, plus certain transfer costs, less anything you receive in return. There is also normally no Capital Gains Tax on a genuine qualifying gift to charity.

These gifts can be very tax efficient, but the rules are more detailed than for cash donations. Advice should be taken before the asset is transferred, especially if the asset has recently increased in value, has been acquired recently, is jointly owned, or is being sold to the charity at an undervalue rather than given outright.

Practical points before making a large donation

Bottom line

Gift Aid is simple when the facts are straightforward: the charity claims 25p for every £1 you give, and higher or additional rate taxpayers can claim extra relief. The main traps are signing a declaration when you have not paid enough tax, assuming that subscriptions or tickets always qualify, and missing the claim for higher rate or additional rate relief.

This article is provided for general information only. It does not constitute tax, legal or other professional advice, and should not be relied on as a substitute for specific advice based on your particular circumstances.