Several UK tax reliefs let the same donation deliver more to a charity, and some cost you nothing at all. This guide covers each in the order most donors meet them.
Gift Aid
Gift Aid is the core UK relief on individual donations. When you tick the declaration, the charity reclaims basic-rate tax on the gross value of your gift — worth 25p for every £1 you give.
To qualify you must be a UK taxpayer who has paid at least as much Income Tax or Capital Gains Tax in the tax year as the charity will reclaim on your donations. If you pay no tax, a Gift Aid declaration can leave you owing HMRC the difference, so decline it.
Gift Aid does not apply to donations made on behalf of someone else, to money raised via a collection where individual donors are unidentified, or to the purchase price of goods and services — although charity shops can Gift Aid the proceeds of goods you donate under the retail Gift Aid scheme.
Our Gift Aid basics guide covers declarations and record-keeping in more detail.
Higher and additional-rate relief
This is the relief most often left unclaimed. The charity reclaims only the basic rate; if you pay tax above that, you can claim the difference.
On a £100 donation with Gift Aid, the gross value is £125:
- 40% taxpayer — reclaim 20% of £125, about £25.
- 45% taxpayer — reclaim 25% of £125, about £31.
Claim it on your Self Assessment return, or contact HMRC to adjust your tax code if you do not file one. You can also carry a donation back to the previous tax year if you claim before filing that year’s return, which is useful if your rate was higher then.
Payroll Giving
Payroll Giving — sometimes called Give As You Earn — takes your donation from gross pay before Income Tax. A £10 pledge costs a basic-rate taxpayer £8, a higher-rate taxpayer £6, and an additional-rate taxpayer £5.50.
The advantages are that relief is immediate at your top rate with nothing to reclaim, and giving is regular, which charities value because it makes income predictable. The limits are that your employer must run a scheme, charities cannot add Gift Aid on top, and National Insurance is not relieved.
Giving shares, securities and land
Donating qualifying shares, securities, land or buildings to a UK charity carries two reliefs at once: no Capital Gains Tax on the disposal, and the market value is deductible against your Income Tax. For an appreciated holding this is often the single most efficient way to make a large gift.
The charity must be able to accept the asset, so speak to it first — many smaller charities cannot handle share transfers directly.
Legacies and Inheritance Tax
Charitable gifts in a will are exempt from Inheritance Tax. Beyond that, leaving 10% or more of your net estate to charity reduces the Inheritance Tax rate on the remainder of the estate from 40% to 36%.
Because the 10% test is measured against a statutory definition of the net estate rather than the headline value, this is worth drafting with a solicitor. Legacies are also the largest single source of voluntary income for many UK charities, so a modest share of an estate goes a long way.
Choosing where it goes
Tax efficiency decides how much arrives; it says nothing about whether the charity uses it well. Once you know which relief you are using, check the recipient on the same evidence you would apply to any organisation handling your money — filing record, cause spend, reserves and governance.
You can compare up to four charities working on the same cause with the comparison tool, or browse the full directory with free Clarity Scores from regulator filings.
This guide is general information, not tax or financial advice. Rates and thresholds change, and your position depends on your circumstances — check current rules on GOV.UK or speak to a qualified adviser before acting.