Gift Aid is a UK tax scheme that lets registered charities claim an extra 25p for every £1 you donate — at no additional cost to you. If you are a Higher Rate or Additional Rate taxpayer, you can also claim personal tax relief on your donations, making charitable giving significantly more tax-efficient.
How Gift Aid Works
When you make a Gift Aid declaration, you confirm that you are a UK taxpayer and that the charity can reclaim the basic rate tax (20%) on your donation. The charity claims this directly from HMRC.
For a £100 donation:
- The charity claims 25% of £100 = £25 from HMRC
- Total received by the charity: £125
- Cost to a Basic Rate taxpayer: £100 (no further relief to claim)
The maths works because your £100 net donation is treated as if you earned £125 gross and paid £25 in basic rate tax on it (20% of £125 = £25).
Extra Relief for Higher-Rate Taxpayers
If you pay 40% or 45% tax, you can claim the difference between your marginal rate and the basic rate on your Self Assessment return:
| Tax Rate | Donation | Charity Receives | Your Extra Relief | Net Cost to You |
|---|---|---|---|---|
| 20% (Basic) | £100 | £125 | £0 | £100 |
| 40% (Higher) | £100 | £125 | £25 | £75 |
| 45% (Additional) | £100 | £125 | £31.25 | £68.75 |
A Higher Rate taxpayer donating £100 can claim £25 back through Self Assessment, reducing the real cost of the donation to £75 while the charity still receives £125.
Gift Aid and the Personal Allowance Taper
Gift Aid donations reduce your adjusted net income. This is especially valuable if you earn between £100,000 and £125,140, where the Personal Allowance taper creates a 60% effective marginal rate. A grossed-up Gift Aid donation in this range effectively attracts 60% tax relief, making the true cost of giving remarkably low.
For example, a £1,000 donation by someone earning £105,000 reduces adjusted net income by £1,250 (grossed up), restoring £625 of Personal Allowance and saving approximately £600 in tax.
Making a Gift Aid Declaration
You make a Gift Aid declaration by ticking a box (online or on a form) when donating. You can make a declaration covering:
- A single donation
- All future donations to that charity
- Past donations (up to 4 years back)
You must have paid at least as much UK Income Tax or Capital Gains Tax in the tax year as the total Gift Aid claimed by all charities on your donations. If you have not, you may need to pay the shortfall to HMRC.
Small Donations Scheme
Charities can also claim a Gift Aid-style top-up on small cash or contactless donations of £30 or less without needing a Gift Aid declaration, through the Gift Aid Small Donations Scheme (GASDS). The charity can claim on up to £8,000 of small donations per year.
What Qualifies?
Gift Aid applies to donations of money to registered UK charities and Community Amateur Sports Clubs (CASCs). It does not apply to:
- Payments for goods, services, or raffle tickets
- Donations to non-UK organisations (unless they have UK charity status)
- Donations where you receive a benefit above the permitted thresholds