Introduction
Giving to charity is both generous and tax‑efficient. The UK’s Gift Aid scheme adds 25% to your donation at no cost to you – if you donate £100, the charity receives £125. If you are a higher or additional rate taxpayer, you can claim further relief, reducing the net cost of your donation. Other methods, such as Payroll Giving and donating shares or land, offer even greater tax advantages. This guide explains all the ways to give to charity tax‑efficiently in the UK, how to claim the relief, and how to ensure your chosen charity is eligible.
Based on rules as of June 2026. Always verify current rates with official sources.
Gift Aid: The Core Scheme
Gift Aid is the simplest and most common way to add tax relief to your charitable donations.
How it works:
- You make a donation to a UK registered charity.
- You complete a Gift Aid declaration (usually a tick box on a form or website).
- The charity claims basic rate tax (20%) from HMRC on the grossed‑up amount.
- For a £100 donation, the charity claims £25, receiving £125 total.
What you need: You must have paid enough Income Tax or Capital Gains Tax in the tax year to cover the amount the charity claims. If you pay no tax (e.g., you are a non‑taxpayer), you should not use Gift Aid – the charity would claim relief on tax you have not paid, and HMRC would eventually reclaim it from you.
Gift Aid declaration: A single declaration can cover all donations to a charity (including one‑off and regular) until you cancel it. You do not need to sign a new form for every donation.
Higher and Additional Rate Relief
If you pay tax at 40% or 45%, you can claim the difference between basic rate (20%) and your marginal rate.
Example: You donate £100. The charity claims £25 (basic rate relief). For you, the gross donation is £125. As a 40% taxpayer, you are entitled to relief of 40% × £125 = £50. You have already received £25 relief automatically (through the charity’s claim), so you claim an additional £25 through Self Assessment (or by asking HMRC to adjust your tax code).
Net cost to you: £100 donation – £25 additional relief = £75 net cost for a £125 benefit to the charity. That is a 66% uplift.
For additional rate (45%) taxpayers: Relief = 45% × £125 = £56.25. Additional relief = £56.25 – £25 = £31.25. Net cost = £100 – £31.25 = £68.75 for £125 to charity.
How to claim:
- Self Assessment filers: Enter your total Gift Aid donations (gross amount, i.e., your donation plus the basic rate relief) in the “Gift Aid” section of your tax return. HMRC automatically calculates the additional relief.
- Non‑Self Assessment filers: You can write to HMRC or use your Personal Tax Account to claim higher rate relief. Keep your donation receipts.
Deadline: You can claim for donations made in the tax year up to the filing deadline (January 31st following the tax year). For example, for donations made in 2025/26, claim by January 31, 2027.
Payroll Giving (Give As You Earn)
Payroll Giving allows employees to donate directly from their gross salary (before tax). The donation is deducted from your pay, and you receive tax relief immediately at your marginal rate – no need to claim through Self Assessment.
How it works:
- Your employer offers a Payroll Giving scheme (most large employers do; smaller ones may not).
- You authorise a deduction from your salary (e.g., £50 per month).
- The donation is taken from your gross pay, so you never pay Income Tax on that amount.
- Your employer sends the donation to a HMRC‑approved Payroll Giving agency, which distributes it to your chosen charity.
Tax relief example: You earn £50,000 (higher rate taxpayer) and donate £100 per month through Payroll Giving. Your gross salary is reduced by £1,200 per year. You save £480 in Income Tax (40%) and £24 in National Insurance (2% on the portion above the threshold – but NI relief is not universal; check). The charity receives the full £1,200.
Advantages: Immediate relief at your marginal rate, no need to keep receipts or file claims, and you also save National Insurance (if your employer’s scheme is set up to do so – not all are).
Disadvantages: Not available if your employer does not offer it. You cannot claim higher rate relief on top (it is already given at source). Less flexible than Gift Aid for irregular donations.
Donating Shares, Securities, or Land
Donating certain assets to charity is extremely tax‑efficient because you avoid Capital Gains Tax on the gain and also receive Income Tax relief on the value of the donation.
Eligible assets: Shares or securities listed on a recognised stock exchange (including AIM shares), units in a UK authorised unit trust, certain foreign shares, and land or property (though land is more complex).
How it works:
- You transfer the shares directly to a UK registered charity (not sell them and donate the cash).
- You claim Income Tax relief on the market value of the shares at the time of donation, plus any associated costs (e.g., broker fees).
- You do not pay Capital Gains Tax on any gain (the charity sells the shares tax‑free).
Example: You bought shares for £5,000. They are now worth £20,000. If you sold them, you would have a £15,000 gain, potentially owing CGT (depending on your annual exempt amount). If you donate the shares to charity:
- You pay no CGT on the £15,000 gain.
- You can claim Income Tax relief on £20,000 (the market value). For a higher rate taxpayer, that reduces your tax bill by £8,000 (40% of £20,000). Net cost to you = £20,000 – £8,000 = £12,000, but you have given £20,000 to charity and avoided £? Actually, you gave away shares worth £20,000 – the tax relief reduces your net outlay.
Caveats: The charity must accept share donations (not all do). You need a valuation (market price on the day of transfer). The donation must be made outright – not subject to any conditions. For land and property, professional advice is essential.
How to claim: Report the donation on your Self Assessment tax return. You will need a receipt from the charity confirming the number and value of shares.
Donating Through Your Will (Legacy Giving)
Leaving a gift to charity in your will is free of Inheritance Tax (IHT). The donation reduces the value of your estate for IHT purposes, and if you leave at least 10% of your net estate to charity, the IHT rate on the remainder drops from 40% to 36%.
Example: Your estate is £1 million. You leave £100,000 (10%) to charity. The remaining £900,000 is taxed at 36% = £324,000 IHT. Without the charitable gift, the full £1 million would be taxed at 40% = £400,000. The charitable gift saves your estate £76,000 in IHT, plus the charity receives £100,000 – a win‑win.
How to do it: Instruct your solicitor to include a legacy in your will. You can leave a fixed sum, a percentage, or a specific asset.
Donating Land, Property, or Equipment
Businesses (including sole traders) can donate trading stock, equipment, or land to charity and claim tax relief on the market value. This is complex – seek professional advice. For individuals, donating land or property is possible but usually only worthwhile for high‑value assets.
Checking a Charity’s Eligibility
To claim tax relief, the charity must be registered with HMRC. Most charities in the UK are. You can check:
- The Charity Commission register – for charities in England and Wales.
- OSCR – for Scottish charities.
- HMRC’s list of eligible bodies – includes some community amateur sports clubs (CASCs) and certain other non‑charities.
What about crowdfunding or GoFundMe? Most crowdfunding campaigns are not registered charities. Donations are not eligible for Gift Aid or other tax relief. If you want tax relief, give directly to a registered charity.
Record Keeping and Deadlines
Keep records:
- Gift Aid declarations (signed or confirmed online).
- Receipts or bank statements showing donations.
- For share donations: the charity’s acknowledgement, valuation evidence.
Deadlines for claims: Higher rate relief must be claimed within 4 years of the end of the tax year. For example, donations made in 2025/26 must be claimed by April 5, 2030? Actually, the deadline for amending a Self Assessment return is 12 months after the filing deadline – but the general rule: claim as soon as possible. HMRC’s practice is to accept claims up to 4 years after the tax year, but do not rely on that.
Giving Without Tax Relief
If you are a non‑taxpayer (e.g., a child, a retired person with income below the Personal Allowance), you should not use Gift Aid. The charity would claim tax relief on tax you have not paid, and HMRC could seek repayment from you. Instead, donate directly – the charity still receives your donation, just without the 25% uplift.
If you are unsure whether you pay enough tax, check your tax code. If you are a basic rate taxpayer but have no tax liability (e.g., because your income is all in ISAs), you may still not have paid enough tax to cover Gift Aid claims. HMRC’s guidance suggests that if your total tax liability is less than the Gift Aid claimed (25% of your gross donations), you should not use Gift Aid.
Key Takeaways
- Gift Aid adds 25% to your donation – the charity claims basic rate relief.
- Higher rate taxpayers can claim additional relief (20% or 25% more) through Self Assessment.
- Payroll Giving deducts donations from gross salary – immediate relief at marginal rate.
- Donating shares avoids CGT and gives Income Tax relief on the market value – highly tax‑efficient.
- Legacy giving reduces Inheritance Tax – the rate drops to 36% if you leave 10%+ to charity.
- Check charity eligibility – use the Charity Commission register.
- Non‑taxpayers should not use Gift Aid – give directly.
This article is for general information and educational purposes only. It does not constitute financial advice. Tax rules, allowances, and product terms may change. Always check with HMRC or an FCA-authorised adviser for your personal circumstances.