How the UK Gift Aid scheme works
Gift Aid is a UK tax relief scheme established under Chapter 2 Part 8 of the Income Tax Act 2007. It is designed to boost charitable giving by treating donations as if the donor had already deducted basic rate Income Tax (20%).
Because basic rate tax is calculated on gross income, dividing your net cash donation by 0.8 gives the gross donation received by the charity. The charity reclaims the difference (25% of your cash donation) directly from HMRC at zero extra cost to you, provided you have paid sufficient UK Income Tax or Capital Gains Tax.
Worked example of higher rate Gift Aid relief
Suppose a higher rate taxpayer in England donates £100.00 to a UK registered charity under Gift Aid. The charity gross-up increases the donation to £125.00, meaning the charity claims £25.00 directly from HMRC.
As a 40% higher rate taxpayer, the donor is entitled to reclaim the 20% difference between the basic rate and higher rate on the gross donation. Reclaiming 20% of £125.00 provides the donor with £25.00 in tax relief.
Consequently, the charity receives £125.00 while the true net cost to the donor is only £75.00, achieving an effective donor tax relief of 25.00% and extending the donor's basic rate tax band by £125.00.
Claiming tax relief via Self Assessment and tax codes
Charities reclaim their 25% basic rate portion automatically, but donors in the higher (40%) or additional (45%) rate brackets must claim their extra relief themselves. You can claim by entering your total Gift Aid donations in the Charitable Giving section of your annual Self Assessment tax return.
Alternatively, if you pay tax under PAYE, you can contact HMRC to have your tax code adjusted, allowing you to receive your higher rate Gift Aid tax relief each month through your payslip.
Gift Aid donations reduce your adjusted net income to help avoid the child benefit tax charge or personal allowance taper. Check our adjusted net income calculator.
To see how Gift Aid reduces your final Self Assessment balancing payment, visit the tax return calculator.
Scottish taxpayers and Gift Aid
In Scotland, where income tax rates include the intermediate rate (21%), higher rate (42%), advanced rate (45%), and top rate (48%), donors can reclaim the exact difference between their Scottish marginal rate and the UK basic rate (20%).
For example, a Scottish higher rate taxpayer paying 42% reclaims 22% of the gross donation, reducing the net cost of a £100 donation to just £72.50.
Inputs for the Gift Aid calculator
Tax year
The UK tax year in which you made the charitable donation (runs 6 April to 5 April).
Your net donation amount
The net cash donation you give to the charity or community amateur sports club.
Your Income Tax bracket
Your highest marginal UK Income Tax rate bracket for the current tax year.
Tax region
Your tax jurisdiction for UK Income Tax rates and tax band thresholds.
CALCULATOR QUESTIONS
Gift aid calculator questions
How much does Gift Aid add to a donation?
Gift Aid adds 25p for every £1 you donate. This represents the 20% basic rate Income Tax you are deemed to have paid on the gross amount of your donation.
Can I claim Gift Aid if I do not pay UK tax?
No. You must pay at least as much UK Income Tax or Capital Gains Tax in that tax year as the total Gift Aid claimed on all your donations. If you pay less tax than the charity claims, HMRC may ask you to pay the difference.
How do higher rate taxpayers claim back Gift Aid?
Higher rate (40%) and additional rate (45%) taxpayers claim back 20% or 25% of the gross donation either through their annual Self Assessment tax return or by contacting HMRC to adjust their PAYE tax code.
Does Gift Aid reduce my adjusted net income?
Yes. Gross Gift Aid donations reduce your adjusted net income, which can help you restore tapered Personal Allowance (if earning between £100,000 and £125,140) or avoid the High Income Child Benefit Charge.