Gift Aid is a government scheme that lets charities reclaim the basic rate tax on your donations — boosting every £1 you give to £1.25 at no extra cost to you. If you pay higher or additional rate tax, you can claim even more back personally. It also has a hidden benefit: it reduces your adjusted net income, which can restore a tapered Personal Allowance.
How Gift Aid works for charities
When you tick the Gift Aid box, you are declaring that you are a UK taxpayer and have paid enough tax to cover the reclaim. The charity claims 25p from HMRC for every £1 you donate (the basic rate equivalent). Your £100 donation becomes £125 for the charity.
Higher-rate and additional-rate relief
If you pay 40% or 45% tax, you can claim the difference between your rate and the basic rate through Self-Assessment:
- Higher rate (40%): claim back 20% of the grossed-up donation
- Additional rate (45%): claim back 25% of the grossed-up donation
Example: you donate £1,000 with Gift Aid. The grossed-up amount is £1,250. If you pay 40% tax, you can claim 20% × £1,250 = £250 back through your tax return. Your real cost is £750 for a donation worth £1,250 to the charity.
Reducing your adjusted net income
Gift Aid donations extend your basic rate band by the grossed-up amount. More importantly, they reduce your adjusted net income for purposes of:
- The Personal Allowance taper (£100K–£125,140)
- The High Income Child Benefit Charge (£60K–£80K)
- The pension Annual Allowance taper
If you earn £105,000 and make £5,000 in Gift Aid donations, your adjusted net income falls to £100,000 — fully restoring your Personal Allowance and potentially saving you more in tax than the donation itself costs.
The Gift Aid declaration
You must have paid at least as much UK income tax (or CGT) in the tax year as all charities will reclaim on your gifts. If you have not paid enough tax, you may need to repay HMRC the shortfall.
Carry-back elections
You can elect to treat a Gift Aid donation as if it were made in the previous tax year. This is useful if you want the relief on last year's return. The donation must be made before you file the return.
See the impact on your tax
The income tax calculator includes a Gift Aid field — enter your annual donations to see how they affect your take-home pay and marginal rate. For those in the £100K trap, also see our £100K tax trap guide.