Gift Aid lets a UK charity claim back the basic-rate tax you have already paid on a donation, which adds 25p to every £1 you give at no extra cost to you. A £100 donation becomes £125 for the charity. If you pay tax at the higher or additional rate, you can also claim the difference back for yourself through Self Assessment or your tax code.
The catch is that you must have paid enough Income Tax or Capital Gains Tax in the tax year to cover what the charity reclaims. This guide explains who qualifies, how the higher-rate claim works and the less obvious ways Gift Aid can cut your tax bill.
How Gift Aid works
When you give, the law treats your donation as if it had already had basic-rate tax (20%) taken off. The charity claims that tax back from HMRC. Because £100 is 80% of £125, the charity receives an extra £25 on every £100.
To make this work you sign a Gift Aid declaration, which is usually a tick box or short form on the donation page. One declaration can cover future donations to that charity and donations from the last four years. Gift Aid applies to registered charities and community amateur sports clubs (CASCs).
Can you tick the Gift Aid box?
You can use Gift Aid if you are a UK taxpayer and your Gift Aid donations in the tax year (6 April to 5 April) are no more than four times the tax you paid. In other words, you must have paid at least 25p in tax for every £1 you give. Income Tax and Capital Gains Tax both count. VAT and council tax do not.
- Earning above the £12,570 Personal Allowance usually means you pay enough to cover modest donations
- Non-taxpayers, including many students and people living on the State Pension alone, should not tick the box
- If you do not pay enough tax, HMRC can ask you to pay the shortfall
- Tell charities if your circumstances change, for example if you stop working
- Joint donations: only the taxpayer should make the declaration
Claiming higher-rate relief
If you pay tax above the basic rate, you can claim the difference between your rate and 20% on the gross (grossed-up) donation. You do this on your Self Assessment return or, if you do not file one, by asking HMRC to adjust your tax code. Claims of £5,000 or less can be made by phone.
| Your tax rate | Charity receives on £100 | You can claim back | Real cost to you |
|---|---|---|---|
| Basic 20% | £125 | £0 | £100 |
| Higher 40% | £125 | £25 | £75 |
| Additional 45% | £125 | £31.25 | £68.75 |
Scottish taxpayers claim in the same way, at their own rates. Scotland's intermediate rate of 21% means a small claim (1% of the gross donation), and the 42%, 45% and 48% bands give larger ones.
How Gift Aid can cut tax on a high income
Grossed-up Gift Aid donations reduce your adjusted net income, the figure HMRC uses for two expensive tax traps.
- The Personal Allowance taper: you lose £1 of allowance for every £2 of income above £100,000, which creates an effective 60% tax rate between £100,000 and £125,140. Gift Aid donations bring adjusted net income down, so some allowance is restored.
- The High Income Child Benefit Charge: the charge starts at £60,000 and claws back all Child Benefit by £80,000. Donations can reduce or remove it.
- Carry back: you can elect to treat donations made this tax year as if made last year, if you file your return by the deadline (31 January online). This helps if you paid higher-rate tax last year but will not this year.
Other ways to give tax-efficiently
Gift Aid is not the only route.
- Payroll Giving: donations come out of your pay before Income Tax, so you get relief at your top rate automatically. National Insurance is still charged.
- Retail Gift Aid: when you donate goods to a charity shop, you can sign up so the charity sells them on your behalf and claims Gift Aid on the proceeds. The shop will write to you about the amount raised.
- Gifts of shares or property: giving qualifying shares or land to charity can give Income Tax relief and no Capital Gains Tax.
- Gifts in your will: gifts to charity are free of Inheritance Tax, and leaving at least 10% of your net estate to charity can reduce the rate on the rest from 40% to 36%.
What does not qualify
Gift Aid only applies to genuine gifts of your own money. These do not qualify:
- Raffle and lottery tickets
- Payments for goods or services, such as event tickets or a charity auction purchase at full value
- Donations of money collected from other people, such as a bucket collection you pass on
- Donations where you get a significant benefit in return above HMRC's limits
- Membership fees that mainly buy access to facilities or services
Small Donations Scheme for cash gifts
Charities can also claim a Gift Aid-style top-up on small cash and contactless donations of £30 or less without a declaration, up to £8,000 of donations a year, under the Gift Aid Small Donations Scheme. This is claimed by the charity, so there is nothing for you to do, but it is why charities still value bucket and tap-to-give donations.
If giving is part of your monthly budget, set it alongside your saving in our budget planner. For other reliefs you might be missing, see our guide to UK tax-free allowances, and if you earn close to £100,000, read how salary sacrifice works, which can also lower adjusted net income.
Frequently asked questions
Does Gift Aid cost me anything?
Should I tick Gift Aid if I am retired?
How do I claim higher-rate tax relief on charity donations?
How much can a 40% taxpayer claim back on Gift Aid?
Can I Gift Aid sponsorship money?
Do Gift Aid donations count towards the £100,000 tax trap?
- Gift Aid
- charity donations
- tax relief
- Self Assessment
- higher-rate tax