The benefit of Gift Aid to the taxpayer

Category: CharitiesTaxation - Posted On: Mar 16 2022

Much is made of the benefit of Gift Aid donations to charities, but many taxpayers are missing out on the benefits to them from making these donations.

For example, for every 80p donated to charity under the Gift Aid scheme, the Government give 20p tax to the charity – the equivalent of basic rate tax paid on the donation. Higher rate tax payers can also claim an additional 20p (or 21p in Scotland) in relief on their tax return, meaning that the cost to donate £1 to the charity is only 59p. This relief can be extended further where the level of income triggers the High Income Child Benefit Charge (HICBC), which requires earners over £50,000 to repay any child benefit received in the year.

Under normal circumstances, Gift Aid relief is given in the tax year the donation is made but donations made between the end of the tax year and the submission of the tax return can be claimed early. This can result in significant savings where income levels narrowly breach a tax threshold. Tax thresholds where this can apply include the higher rate threshold, particularly where a Marriage Allowance transfer would otherwise be possible, the £50,000 HICBC limit or, for those with significantly higher income levels, the £100,000 threshold where the Personal Allowance starts to be reduced.

Bringing donations made before 31 January 2023 into your April 2022 tax return for those who make regular Gift Aid payments, whether annual, monthly or weekly, has the potential to save you a significant amount of money. This means that tax relief can be obtained 12 months sooner – although it would increase your April 2023 liability, the savings in April 2022 usually outweigh this. Our EQ Charities team can check if this election will give you an overall tax saving.

This claim can only be made on an original tax return submitted on time, which underlines the importance of keeping good records and making sure your EQ contact is aware of your full situation when preparing your return.

For further support with Gift Aid relief, please contact a member of our EQ Charities team via or contact one of our offices.

Alternatively, if you would like to discuss how Gift Aid can help reduce your exposure to higher rate tax, get in touch with our Private Client Taxperts via