Tax & compliance

Do I get tax relief on charitable donations?

Q: Do I get tax relief on charitable donations?

Yes. Gift Aid lets a UK charity reclaim 25p for every £1 you donate, and if you pay higher or additional rate tax you can claim further relief through self assessment — worth 25p per £1 at 40%, or about 31p at 45%. Limited companies deduct donations from profits before corporation tax instead of using Gift Aid. Leaving 10% or more of your net estate to charity also cuts the inheritance tax rate on the rest from 40% to 36%.

By Kaiser Khan · Updated 29 July 2026

Gift Aid — and the trap most donors miss

When you tick the Gift Aid box, the charity reclaims basic-rate tax on your donation: £100 becomes £125 in the charity's hands. The condition people overlook is that you must have paid at least as much UK income tax or capital gains tax in that year as every charity will reclaim across all your donations. Retirees living on a tax-free pension, or anyone whose income drops below the personal allowance, can end up owing HMRC the shortfall. If your tax position changes, tell the charities you support.

Higher and additional-rate relief you have to claim yourself

Gift Aid only hands basic-rate tax to the charity. If you pay 40% or 45%, the extra relief is yours — but only if you claim it on your self assessment return. A £100 donation is treated as £125 gross; a higher-rate taxpayer claims the 20% difference (£25), an additional-rate taxpayer 25% (£31.25). Donations can also be carried back to the previous tax year if you claim before filing, which is useful if last year was your higher-earning one. This relief goes unclaimed constantly — it is one of the easiest wins an accountant finds on a first review.

Payroll Giving and gifts of assets

Payroll Giving (Give As You Earn) takes donations from gross pay, so a £100 donation costs a 40% taxpayer £60 with no claim to make — simpler than Gift Aid, though the charity cannot add the 25% top-up. Gifting qualifying shares, securities, or land is more generous still: you deduct the market value from your income for income tax and pay no capital gains tax on the disposal, making it an efficient way to give appreciated assets rather than selling first and donating cash.

Giving through a limited company

Companies don't use Gift Aid — a qualifying donation is simply deducted from profits before corporation tax, so a £1,000 gift reduces the tax bill by £250 at the 25% main rate. The donation must be a genuine gift: sponsorship where your company receives advertising or other benefits is a business expense with different rules, and benefits flowing back to the company or its directors can disqualify relief entirely. Donations cannot create or increase a trading loss. Where you have a choice, model personal versus company giving with your accountant — the answer depends on your own tax rate.

Check the charity before you give

Tax relief only applies to donations to charities recognised by HMRC, and relief is worth nothing if the money doesn't do what you intended. Before committing anything substantial, confirm the charity's registration and look at its finances — how much of its spending reaches charitable activities, whether its filings are on time, and what its reserves look like. Our sister site CharityCompare rates every major UK charity's financial transparency from Charity Commission filings, free and independent. For larger or regular giving, an accountant can also advise on structuring — a donor-advised fund or charitable trust can make sense once giving becomes significant.