Blog Search


Gift Aid tax relief

This year, many charities have been heavily impacted by the coronavirus pandemic and have struggled to raise funds. Highlighting the prospects of tax reliefs on donations is one way to encourage gifts.

Broadly, the government’s Gift Aid scheme is designed to help maximise the value of a gift made to a charity by allowing most UK taxpayers to claim tax relief on the gift.

Under the Gift Aid scheme, individuals can claim tax relief on making one-off or regular gifts to charity. No lower or upper limit applies on donations upon which tax relief may be claimed. The payment is treated as paid net (that is, as if basic rate income tax had been deducted at source). The basic rate tax deemed to have been deducted by the donor is clawed back by HMRC if the donor’s income tax and/or capital gains tax (CGT) liability for the year is insufficient to match the tax retained. Higher and additional rate taxpayers can claim additional relief against their income tax or CGT liability, as appropriate.

The person making a donation doesn’t necessarily have to be working to be paying tax. This means, for example, someone receiving a state and/or other pension net of tax deductions, may also be able to benefit from tax relief on Gift Aid donations.


If you make a donation of £100 under the Gift Aid scheme and you’re a basic rate taxpayer, the charity is able to claim back tax of £25 from the government, which means the charity receives £125, but it costs you only £100. A higher rate taxpayer can claim 20% (the difference between the higher rate of tax at 40% cent and the basic rate of tax at 20%) as a tax deduction on the total value to the charity of the donation. So, on a gift of £100, a higher rate taxpayer can reclaim £25 (20% of the gross donation of £125). The claim is usually made via the individual’s self-assessment tax return.

It is possible to elect for a donation to be treated as paid in the previous tax year. The election must be made to HMRC by the date on which the individual’s tax return was submitted for the previous tax year and, in any event, no later than 31 January following that tax year. An election can only be made if the gift can be paid out of taxed income or gains of the previous tax year.

The election provisions may be particularly useful to someone who’s income for a particular tax year nudges just over the higher rate income tax threshold. It may be possible to make a gift under Gift Aid, which in turn will reduce liability to tax at the higher rate, and mean that the taxpayer could potentially avoid paying tax at marginal tax rates of up to 64.75%.

Claiming tax relief

Under Self-Assessment, Gift Aid donations made in the previous tax year will be recorded on each year’s return, which would mean that for higher and additional rate taxpayers, there will be a delay in receiving the additional Gift Aid tax relief. However, the Gift Aid rules allow an individual to claim tax relief on donations made in the current tax year, up to the date their SA return is submitted, if they either:

– want tax relief sooner; or
– will not pay higher rate tax in current year, but did so in the previous year

This claim cannot be made this if:

– the filing deadline has been missed (31 January for online filing); or
– the donations do not qualify for Gift Aid – donations from both tax years together must not be more than four times what was paid in tax in the previous year.

The end of the tax year is a good time to review charitable donations to ensure that all tax relief due has been claimed, and, where relevant, to ensure that timely elections are made to relate payments back to the previous tax year.

  • Latest news and testimonials

  • Latest News

    • September Q&A

      Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both …

      Read more
    • Making Tax Digital for Business: update

      In July, the Government confirmed that the Summer Finance Bill would be published in September, with the measures dropped from the pre-election Finance Bill being reintroduced …

      Read more
  • Testimonials

    • Partner – Solicitor

      I have worked with SBL over the last 10 years on numerous matters involving owner-managed business. They are professional, personable, knowledgeable and work incredibly hard to provide the best advice to their clients. I would have no hesitation in recommending SBL.

  • Don’t hesitate to ask

    SBL are here to help. With accountancy advice and tax planning experts on hand to guide you and your business on the pathway to success! You can call us on 020 7580 6822, or email us on or if you’d prefer you can complete our Free Online Enquiry Form and one of the team will be in touch shortly.

    Don’t hesitate to ask

    Don’t hesitate to ask section

    • This field is for validation purposes and should be left unchanged.

    By submitting my details on this form, I consent to being contacted by a member of the SBL Accountants team by email or telephone. Privacy Policy