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How does Gift Aid work?

Plus how higher and additional-rate taxpayers can claim tax back on charity donations

Helen Saxon
Helen Saxon | Edited by Hannah McEwen
Updated 6 April 2024

Gift Aid is a scheme that lets UK taxpayers easily supercharge their charity donations. Every time you say 'yes' to Gift Aid, each tenner you give becomes £12.50 for the charity at no extra cost to you. And if you’re a higher or additional-rate taxpayer you can later claim some further tax back (which you could donate too). Here's how it all works...

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What is Gift Aid and how does it work?

Gift Aid is a government scheme that lets charities and 'Community Amateur Sports Clubs' claim tax relief on the donations that you make to them.

The idea behind it is that you're usually making donations from your post-tax income. The charity then takes your donation, and – if you've agreed to Gift Aid – claims your basic-rate (20%) tax back from HM Revenue & Customs.

To claim Gift Aid on your donation, the charity will need:

  • Your name and address
  • You to declare that you pay tax in the UK of an amount at least equal to the amount the charity will claim in Gift Aid on your donation (those who pay no tax shouldn't use the Gift Aid scheme).
  • Your signature (or a box ticked if it's online) and the date.

Here's how it works...

You make a donation of £100 to a charity, and agree the charity can claim Gift Aid. The charity then claims £25 from the state in tax relief, meaning your total donation now amounts to £125.

Why is Gift Aid an extra 25% if the charity's claiming basic 20% tax?

This is down to a quirk of how the Gift Aid tax-relief scheme works. The charity is allowed to claim 20% of the pre-tax amount you earned to make that donation. An example should help here (we're assuming you're a basic-rate taxpayer, and ignoring national insurance for simplicity)...

For you to be able to make a donation of £100 to a charity from post-tax income, you would have needed to earn £125 before tax (20% tax on £125 is £25). 

The charity can therefore claim 20% of your pre-tax donation amount of £125, which is £25. This works out as 25% of your original £100 donation. 

Quick question

  • Are there any sort of charity donations that don't qualify for Gift Aid?

    Yes, there are a few scenarios where the charity can't claim Gift Aid (and you shouldn't give your permission), including...

    • Donations where the cash hasn't all come from you. For example, if you were collecting sponsorship money, and then donated it all in one go, this wouldn't qualify for Gift Aid. (Note that online charity crowdfunders are fine, because each person donates directly to the charity rather than giving the cash to the person who set up the page.)

    • Payments to a charity where you get something in return. This could include visits to a National Trust property, for example, or any other charity where you get admission to a property or event.

      What charities usually do if selling tickets to a property or event is to offer two types of tickets – one that's the normal admission price, and another that's at least 10% more expensive (so it includes a donation). If you 'freely choose' the more expensive ticket, it's then considered as a donation that allows you to see the event or property, and so qualifies for Gift Aid.

      If the charity sells you a ticket like this (or one that allows admission as many times as you like for at least 12 months), the charity can claim Gift Aid on the whole amount of the ticket. 

    • Donations of money from a company. If you are making a charity donation on behalf of a company, this won't qualify for Gift Aid, even if you make the donation from your own credit or debit card and then later claim it back. 

    For full information about what sort of payments do and don't qualify for Gift Aid, go to Gov.UK.

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Intermediate, higher or additional-rate taxpayer? You can claim extra tax relief...

If you live in England, Wales or Northern Ireland and pay higher-rate tax of 40% or additional-rate tax of 45%, then you can claim extra tax relief on gift-aided charity donations, on top of what the charity has already claimed.

What you can claim is the difference between the highest rate of tax you pay, and the basic-rate of tax (20%, which the charity has already reclaimed through Gift Aid). So, higher-rate taxpayers could reclaim an extra 20%, and additional rate taxpayers an extra 25%.

If you live in Scotland, the same rules apply, but the tax rates are different. So, intermediate-rate 21%, higher-rate 42%, advanced-rate 45% and top-rate 48% taxpayers can all claim something back.

The table shows how much extra you could get in tax relief on a £100 donation (remember the charity has already claimed the basic-rate tax relief). As above, the tax relief is worked out as a percentage of the amount you'd have earned pre-tax to make the donation. 

Extra tax relief you can claim on a £100 donation

Tax band In England, Wales & Northern Ireland In Scotland
Intermediate rate (21%) N/A £1.25
Higher rate (40% or 42%) £25 £27.50
Additional/advanced rate (45%) £31.25  £31.25
Top rate (48%) N/A £35

You could 'pre-donate' the extra tax relief to charity knowing you'll get it back

Once you've claimed the tax relief due, you can choose what to do with it. Many choose to donate the extra to the charity, so it benefits from Gift Aid twice over.

Let's imagine you're a higher-rate 40% taxpayer in England. If you donate £100 and Gift Aid it, then the charity gets £125 and you can claim £25 back. Effectively your donation cost you £75.

Yet you could instead give the charity £133.33 upfront. In this case, the charity can claim £33.33 in Gift Aid, making your total donation £166.66. Yet you can also claim £33.33 as extra tax relief, meaning your donation effectively cost you the original £100 you planned to donate, but in this scenario the charity's much better off.

How do I claim the extra tax relief on gift-aided charity donations?

If you fill in a self-assessment tax return, you can enter details of all your gift-aided donations in the charitable giving section of the form. If you're new to this, make sure you keep records of all gift-aided charity donations in the future so you have accurate numbers to fill in.

If you don't fill in a self-assessment form, you can call HMRC on 0300 200 3300 and tell it about your charitable donations, so it can adjust your tax code (if you're an employee or receiving a private pension). This will mean you'll have less tax taken off you in future to give you the extra relief you are due. If you're not an employee or receiving a pension, HMRC may issue you a refund cheque.

Quick questions

  • Do I have to wait until the end of the tax year before I claim the extra tax relief?

    No, not always.

    If you fill in a self-assessment form, you can 'bring forward' claiming relief on gift-aided charitable donations. An example will help explain...

    In September 2024, you sit down to do your 2023/24 self-assessment. As well as claiming tax relief for charity donations in the 2023/24 tax year, you can also claim tax relief on any donations you've made in the 2024/25 tax year, up until the date you submit it

    In this scenario, you should also include these donations in your 2024/25 tax return. There is a box where you can tell HMRC about any donations you've already claimed tax relief for (it won't pay you relief twice on the same donations).

    If you don't do self-assessment,  contact HMRC and ask for a P810 form.

  • Can I claim tax relief on charity donations from previous years?

    If you weren't aware you could claim additional tax relief on charity donations, then you can make a claim for overpayment relief going back four tax years. 

    We're currently in the 2024/25 tax year, which ends on 5 April 2025, so you could claim as far back as the 2020/21 tax year.

    Though, of course, you'll need to have records of gift-aided charitable donations you made in those years.  

Other ways to donate

There are a few other ways you can help charities without making an outright donation, including...

  • Donate your Nectar points. Nectar has partnered with Crowdfunder to allow cardholders to donate their Nectar points to help charities. You can choose from 100s of local and national charities, including Macmillan, RNLI, Campaign Against Living Miserably (CALM) and the RSPCA, among many others. 
  • Help charities as you buy or sell on eBay. The online selling site lets you help charities either as a seller or as a buyer. As a seller, you agree to donate a portion of your selling price to charity, and you get lower seller fees, and a speedier auction. As a buyer, you either buy from a charity's online shop, or you buy a symbolic item.
  • Use a Sparks card when you shop at Marks & Spencer. If you're shopping at M&S anyway, then if you scan your Sparks card at the till, or connect your Sparks to your online account, M&S will give a donation to your chosen charity (you choose from its selection) every time you shop. 
  • Get others to donate on your behalf. There is a way to help at no cost. The Hunger Site and similar sites work by sponsorship. You go to the site, click the link, and sponsors pay for food to be donated to someone who is starving. There are other similar sites which donate to various causes.

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