Answers · UK 2025/26
How does Gift Aid increase the value of a charity donation?
Gift Aid allows UK charities to reclaim 25p of basic-rate income tax for every £1 you donate, boosting the donation by 25% at no extra cost to you. A £100 donation becomes £125 for the charity. You must be a UK taxpayer and have paid at least as much tax as the charity claims.
Full answer
Gift Aid is a UK government scheme that lets registered charities reclaim the basic-rate income tax (20%) on donations made by eligible UK taxpayers. Because the basic rate is 20%, for every £1 donated the charity can claim back 25p -- not 20p -- since the donation is treated as if it were made after basic-rate tax was deducted from a larger gross amount. **The maths explained** When you donate £100, HMRC treats this as if you earned £125, paid 20% tax (£25), and donated the net £100. The charity reclaims that £25 from HMRC. - Your cash donation: £100 - Gift Aid reclaim by charity: £25 - **Total value to charity: £125** (a 25% uplift) **Eligibility** To make a valid Gift Aid declaration you must: 1. Be a UK taxpayer. 2. Have paid at least as much income tax or capital gains tax in the tax year as the charity will reclaim on your donation. 3. Sign a Gift Aid declaration (usually a checkbox on a form or online donation page). **What happens if you are not a taxpayer?** If you donate under Gift Aid but have not paid enough tax to cover the amount the charity reclaims, HMRC can ask you to repay the shortfall. This is important for low-income donors or those whose income falls in a given year. **Higher and additional-rate taxpayers -- extra relief** Basic-rate taxpayers receive the uplift entirely via the charity. However, higher-rate (40%) and additional-rate (45%) taxpayers can personally claim back the difference between their marginal rate and the basic rate. - Higher-rate taxpayer donating £100: Charity gets £125; taxpayer reclaims 20% of the gross donation (£125 x 20% = £25), so the net cost is only £75. - Additional-rate taxpayer: 25% personal reclaim on the gross amount. Personal reclaims are made through Self Assessment or by writing to HMRC. **Example -- £500 donation, higher-rate taxpayer** - Cash donated: £500 - Charity receives: £500 + £125 Gift Aid = £625 - Taxpayer reclaims: £125 via Self Assessment - Net cost to donor: £375
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.