Donate Tax Effectively in United Kingdom

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Most of the charities we recommend are eligible for Gift Aid in the UK if you donate via Effective Altruism Funds.

Donate via Effective Altruism Funds

Donating with Gift Aid means that the charities can claim an extra 25p for every £1 you give. It will not cost you any extra.

Giving What We Can members can automatically track donations made via Effective Altruism Funds to their pledge without needing to report them separately. Gift Aid will also be included in the donation amount when tracking towards the pledge.

Payroll giving – donating to charity directly from pay slip or company/private pension

For those that pay tax through PAYE (pay as you earn), you can donate to charity directly from your payslip or company or personal pension before Income Tax has been deducted (but after National Insurance) which means that your donation gets tax relief immediately at the highest rate of tax you pay. Your employers need to have a Payroll Giving Scheme. See here for more information.

Donating assets

If you give a charity assets including land, buildings or shares you may be eligible for tax relief of some kind. See here for more information.

Gift Aid restrictions

The amount of tax the charity can claim back cannot be more than the amount of tax that you paid in the tax year in which the donation is made. This includes Income Tax, Capital Gains Tax and tax from pensions, interest on savings, investments and rental income.

This only applies to certain charities. They must be based in the UK, the EU, Iceland or Norway, and they must be registered by HMRC.

You will need to make a Gift Aid Declaration provided by the charity before they can claim back Gift Aid on a donation.

Gift Aid: Further considerations

Gift Aid can be claimed back on gifts made jointly if you tell the charity how much each of you gives and you must both make a Gift Aid declaration.

If you have not yet submitted your Self-Assessment Tax Return for the previous tax year then you can choose whether to treat the donation as for this or the previous tax year so long as enough tax was paid in the previous year to cover the donation on top of all last year's donations.

You should inform the HMRC of any Gift Aid donations if you receive age-related Personal Allowance, Married Couple's Allowance or tax credits as this can affect the amount you receive. When they work out how much Allowance or tax credit to award they will take the amount donated plus the basic rate tax from the total income and use that figure to determine the amount to give rather than just your income.

Other tax exemptions

With Gift Aid the charity can reclaim only at the basic rate of income tax. If you pay tax at a higher rate than the basic rate then you can claim back the difference on your Self-Assessment Tax Return.

The difference in the higher rate compared to the basic rate of tax is claimed on the total value of the donation. E.g. if you pay 45% tax rate and donate £1000 to charity, the value of the donation due to the basic rate of tax (20%) is £1250 and you can claim back the difference (25%) of the total value: 0.25 x £1250 = £312.5.

For HMRC's guidance please see here