Tax Benefits of Donating in the UK: What You Need to Know
Intro
Giving to charity is mainly about supporting causes you care about. In the UK, the tax system can also make donations more efficient, for you and for charities, if you understand how it works. This guide explains the key rules to be aware of.
1. Can You Get Tax Relief on Donations in the UK?
Yes, mostly through Gift Aid.
Gift Aid allows charities to reclaim basic-rate tax on eligible donations. It doesn’t reduce the amount you give, but it increases what the charity receives.
How it works:
You must be a UK taxpayer.
You must have paid enough income or capital gains tax to cover the Gift Aid claimed.
The charity reclaims 25p for every £1 you donate.
If you pay higher-rate tax:
You can personally claim extra tax relief through Self Assessment.
This reduces your tax bill, rather than increasing the charity’s payment.
Example:
You donate £100.
The charity receives £125.
If you’re a higher-rate taxpayer, you can claim up to £25 back via HMRC.
2. What Donations Qualify for Tax Relief?
Usually eligible:
Cash donations (direct debit, bank transfer, card payments)
Payroll Giving through your employer
Donations of shares, land, or property to a registered UK charity
Sponsored events where you receive no significant benefit
Not eligible:
Raffle or lottery tickets
Auction bids where you receive something in return
Donations to individuals
Donations to overseas charities that are not UK-registered
3. Making the Most of Gift Aid (Without Overcomplicating It)
A few practical points:
Always confirm Gift Aid if you’re eligible, charities can’t claim it otherwise.
Higher-rate taxpayers need to actively claim extra relief; it isn’t automatic.
Keep records: bank statements or use an app like Legacy to track your giving.
If your income changes year to year, double-check you’ve paid enough tax to cover Gift Aid.
4. Giving Through a Will and Inheritance Tax
Charitable gifts in a will can reduce inheritance tax (IHT):
Gifts to UK charities are exempt from IHT.
Leaving at least 10% of your estate to charity reduces the IHT rate on the remainder from 40% to 36%.
This can be a thoughtful and tax-efficient way to support causes long-term, usually alongside professional advice.
5. How Legacy Helps Make This Easier
Keeping track of Gift Aid and tax relief is often where people slip up, not because it’s hard but because it’s easy to forget.
Legacy is designed to reduce that friction by:
Clearly showing which charities are Gift Aid eligible before you donate
Tracking your total donations across the tax year in one place
Providing a simple annual total you can use when completing Self Assessment
No spreadsheets, no digging through bank statements, just a clear record of what you’ve given in a tax year.
Final Thought
Giving shouldn’t feel like an administrative headache. A bit of clarity around tax rules can help your donations go further for charities, while making life easier for you at tax time. Tools like Legacy don’t change why you give - but they make the process more rewarding and easier to manage year after year.
Legacy - Build For Good. Not For Gain