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How Gift Aid works

Gift Aid works by allowing charities to take a donation (which is money that the donor has already paid tax on), and then reclaim tax on its 'gross' equivalent (its value before tax was deducted) at the basic rate. This is 20 per cent from 6 April 2008.

In practice this means that for every pound donated to charity using Gift Aid the charity can claim an additional 25 pence from HMRC. In addition HMRC will automatically pay the charity a further 3 pence for every pound Gift Aid donation it receives between 6 April 2008 and 5 April 2011; this transitional relief has been provided by Government to allow charities to adjust to the fall in basic rate tax (from 22% to 20%) from 6 April 2008. This means that for every pound donated under the Gift Aid scheme the charity will continue to receive 28 pence.

Gift Aid can apply to one-off donations or to a series of regular donations.

Gift Aid declarations

In order for a donation to qualify under Gift Aid the donor needs to make a declaration saying that they would like to donate through the Gift Aid scheme and confirming that they have paid enough tax to cover the charity’s claim. The charity can ask for a written declaration or they may accept oral declarations.

A Gift Aid declaration can apply to:

• a single donation
• all future donations to the same charity
• donations made to the charity in the previous six years or
• a combination of these options.

The charity will ask which type of declaration the donor wants to make.

Who can donate through Gift Aid?

A donor can use Gift Aid if the amount of tax they have paid in the tax year of the donation is sufficient to cover the amount of tax the charity will reclaim against the donation.  The tax paid by the donor may be Income Tax, Capital Gains Tax or tax credits on UK company dividends. Tax years start on 6 April and run until 5 April the following year. 

Higher rate taxpayers

A higher rate taxpayer who makes donations through Gift Aid can claim back the difference between the higher rate of tax at 40 per cent and the basic rate of tax at 20 per cent on the total value to the charity/CASC of their donation (the 'gross donation').

The donor may choose to give some or all of this difference to charity.

Donors who complete a Self Assessment tax return will have an option to claim back the higher rate element of the tax relief on any donations made to charity. Donors who do not complete a Self Assessment tax return can call their tax office and have the higher rate relief reflected in their PAYE tax code.

SA Donate

SA Donate is a scheme for donors who complete Self Assessment tax returns and it enables donors to gift any repayment of tax that they are entitled to direct to charity.  They can also use Gift Aid for this type of donation.

• Read more about SA Donate on the HMRC website (opens new window)

Non taxpayers

If you do not pay tax, you should not use Gift Aid.

Find out more about giving through Gift Aid

• Gift Aid guidance for donors (opens new window)
• More information on giving and supporting the Third Sector (opens new window)

Find out more about receiving donations through Gift Aid

The most comprehensive source of guidance and support for charities on claiming Gift Aid is HM Revenue and Customs. Through their online guidance and telephone helpline, HMRC will be able to advise on claiming Gift Aid according to your particular circumstances.

• Detailed guidance on Gift Aid from HMRC (opens new window)

The Government has a long term commitment to support charities and enable people to donate money to good causes. Traditionally this has been through tax incentives, which are an important tool for charities, but not the whole solution. The Office of the Third sector provides information on other ways to support charities.

• More guidance on tax effective giving from the Institute of Fundraising (opens new window)

Find out more about training opportunities for smaller charities

The Institute of Fundraising runs a Small Charities Training Programme. Their inexpensive workshops will provide charities with tips and ideas on how to boost their fundraising by making it more tax-effective.

• Learn more about training opportunities for small charities (opens new window)

Find out more about Gift Aid from other charities and fundraisers

Charities can also learn more about Gift Aid from other fundraisers through the Gift Aid mentoring forum. The forum allows Gift Aid practitioners to share experiences and advice in an informal online setting.

• Access more personal advice and guidance through the online Gift Aid Mentoring Forum (opens new window)

Find out more about Gift Aid and community fundraisers

Local community and voluntary groups which are not themselves charities but which do have a charitable purpose may be able to claim the benefit of Gift Aid where donations from supporters are made through a registered charity.

• Further guidance on this scheme is available from the Cabinet Office (opens new window)

More useful links

• More information on how to register a charity in England or Wales (opens new window)
• More information on how to register a charity in Scotland (opens new window)
• Charities in Northern Ireland (opens new window)