How can I give to charity tax-efficiently in the UK?

Full answer

There are several reliefs that make UK charitable giving go further. Gift Aid is the main one: when you tick the box, the charity reclaims basic-rate tax, turning a GBP 100 gift into GBP 125 for the charity. If you pay tax above the basic rate you reclaim the difference through your tax return or PAYE code -- a higher-rate (40%) taxpayer can claim back GBP 25 on a GBP 100 gift, and an additional-rate (45%) taxpayer GBP 31.25, so the net cost falls to GBP 75 or GBP 68.75. You must have paid at least as much income or capital gains tax in the year as all charities will reclaim on your gifts. Who it affects: any UK taxpayer who donates. Higher and additional-rate taxpayers gain most, and Gift Aid donations also extend your basic-rate band, which can help keep income below thresholds such as the GBP 100,000 point where the personal allowance starts to taper. Other routes: Payroll Giving lets you donate from gross pay so relief is immediate at your top rate. Gifting quoted shares or land directly to a charity gives income tax relief on the value plus exemption from capital gains tax, avoiding the 24% (or 18%) CGT charge you might otherwise face after the GBP 3,000 annual exempt amount. Inheritance tax: gifts to UK charities are exempt from IHT, and if you leave at least 10% of your net estate to charity the IHT rate on the rest drops from 40% to 36%. 2026/27 detail: the dividend allowance is GBP 500 and dividend rates have risen, so extending your basic-rate band via Gift Aid can be particularly valuable. Use the income tax calculator to see the relief, and the inheritance tax calculator for legacy giving.

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