The importance of utilising Gift Aid

It’s Gift Aid Awareness Day on 6 October, which is organised by Charity Finance Group (CFG). This year’s #TickTheBox campaign will focus on the value of Gift Aid and charities will be invited to share across their social media, website and newsletters the impact that Gift Aid has on the people and communities they serve.

Gift Aid is an incredibly important source of additional income and something charities need to always remind their donors how it can boost their donations.

The Charities Aid Foundation (CAF) published research earlier this year that warned that charities are missing out on “hundreds of millions of pounds” because 23% of eligible donors do not use Gift Aid1.

The CAF research found that some 68% of full-time workers say they use Gift Aid when donating to charity, which is worth £1.3bn to the charity sector. However, according to the Charity Finance Group more than £500m is unclaimed.

This highlights just how important it is for charities to remind tax paying individuals to use Gift Aid when making a donation. Charities can reclaim the basic rate income tax the individual has paid on the donation, as long as the individual provides the charity with a Gift Aid declaration.

Changes to the basic rate of tax and the impact on Gift Aid

Currently Gift Aid increases the value of the donation by 25%, based on the basic rate of income tax being 20%. The Chancellor announced in September 2022 that the Government intends to reduce the basic rate of tax to 19% from April 2023, which will result a reduction in the Gift Aid claimable.

In order to help charities adjust to this reduction, the Government has agreed that for donations made until March 2027 an additional transitional relief on Gift Aid will be paid in order to match the current rate of 25%. This is expected to be run in a similar manner to the previous transitional relief scheme that applied from 2008 to 2011, with the relief being automatically calculated and paid by HMRC. However, for donations from April 2027 onwards this relief would no longer apply and the Gift Aid claimed would reduce to 23.45%.

Complying with Gift Aid

We have previously run seminars on Gift Aid and also have a Made Simple guide dedicated to Gift Aid which are all available on our website to help charity finance professionals fully understand the rules they must follow when claiming Gift Aid.

Our guide points out the rules to follow and explains how charities can minimise the risks of errors being found during inspections. Charities claiming Gift Aid are subject to inspection by HM Revenue & Customs (HMRC) to ensure compliance.

The guide also covers the Gift Aid Small Donations Scheme (GASDS) which was introduced on 6 April 2013 and which allows charities to claim a Gift Aid like top up payment from HMRC on small donations made in cash or by contactless card payment of up to £30.

GASDS has fewer requirements, for example there is no requirement for a Gift Aid declaration and the donor does not have to have paid sufficient UK tax. However, the amount payable under GASDS is capped and the scheme is subject to its own set of rules and requirements which charity finance professionals must understand.

Recent additions to the guide include concessions introduced during the pandemic in relation to ticket and loan refunds which have now been made permanent. Many charities had to cancel events as a result of the COVID-19 pandemic and the government has agreed to allow individuals to donate any waived refunds of ticket purchases or loans to the charity under Gift Aid without the charity first having to pay the refund or loan to the individual.

The guide details what the charity is expected to do in order to recover the Gift Aid from waived refunds or loan repayments, something some charities may not have been aware they could do.

To request a free copy of our recent Gift Aid seminar please email

To download the Gift Aid Made simple guide click here.

The content of this page is correct at the time of publication stated above but inevitably legal changes, case law and new financial reporting standards will change. You are therefore advised to check any particular actions you plan to take with the appropriate authority before committing yourself. No responsibility is accepted by the authors for reliance placed on the content of this guide.