How Gift Aid Works
When you make a Gift Aid declaration, the charity can claim 25p from HMRC for every £1 you donate. This is because your donation is treated as being made from income that’s already been taxed at 20%.[1]
Example: You donate £100. The charity claims £25 from HMRC, receiving £125 in total. Your £100 donation is “grossed up” to £125 for tax purposes.
Extra Relief for Higher-Rate Taxpayers
If you pay 40% or 45% tax, you can claim the difference between your tax rate and the basic rate on your Self Assessment return:[2]
| Tax Rate | You Donate | Charity Gets | You Claim Back |
|---|---|---|---|
| Basic (20%) | £100 | £125 | £0 |
| Higher (40%) | £100 | £125 | £25 |
| Additional (45%) | £100 | £125 | £31.25 |
Making a Gift Aid Declaration
To use Gift Aid, you simply tick the Gift Aid box or sign a declaration when donating. The declaration confirms you’ve paid enough UK Income Tax or CGT to cover the Gift Aid claimed.[3]
A declaration can cover:
- A single donation
- All future donations to that charity
- Past donations (up to 4 years back)
Eligibility Requirements
You must have paid enough UK Income Tax or Capital Gains Tax in that tax year to cover the Gift Aid claimed. The tax you pay must be at least equal to the amount all charities reclaim on your donations.[1]
Warning: If you declare Gift Aid but haven’t paid enough tax, you may have to repay the difference to HMRC.
Gift Aid Reduces Your Adjusted Net Income
Gift Aid donations (grossed-up amount) are deducted from your adjusted net income. This can help you:[2]
- Keep your Personal Allowance if you’re near the £100,000 threshold
- Reduce or avoid the High Income Child Benefit Charge
- Stay within a lower tax band
Claiming on Self Assessment
Report your Gift Aid donations on your Self Assessment return. Enter the total amount you donated (not the grossed-up amount). HMRC calculates the higher-rate or additional-rate relief automatically.[5]
Frequently Asked Questions
How does Gift Aid work?
When you tick the Gift Aid box, the charity can claim 25p from HMRC for every £1 you donate because your donation is treated as made from income already taxed at 20%. A £100 donation becomes £125 for the charity.
Can higher-rate taxpayers claim extra Gift Aid relief?
Yes. If you pay 40% or 45% tax, you can claim the difference between your rate and the basic rate on your Self Assessment return. A higher-rate taxpayer donating £100 can claim back £25, and an additional-rate taxpayer can claim £31.25.
Can Gift Aid reduce the High Income Child Benefit Charge?
Yes. Gift Aid donations (grossed-up amount) are deducted from your adjusted net income, which can bring you below the £60,000 threshold for the High Income Child Benefit Charge or help preserve your Personal Allowance near £100,000.
Further Reading
- Personal Allowance & Tax Bands
- Filing Your Tax Return
- High Income Child Benefit Charge
- Pension Tax Relief
Looking for simple Income Tax MTD software?
#GoFile is HMRC-recognised and trusted by 50,000+ UK businesses. Set up in minutes, file with confidence.
Get Started For FreeNo credit card required · Cancel anytime
Sources
- Tax relief when you donate to a charity — GOV.UK
- Claim tax relief on donations to charity — GOV.UK
- Gift Aid declarations — GOV.UK
- Gift Aid: detailed guidance — GOV.UK
- Self Assessment: claim tax relief on donations — GOV.UK