It is not always appreciated that donations made under Gift Aid aren’t just good for the recipient charity or community amateur sports club. They can also be a useful planning tool for the donor – and even generate tax refunds for some taxpayers.

Gift Aid benefits donors, too

Gift Aid donations work to your advantage because they can reduce your tax bill and/or preserve allowances or other entitlements.

A timely gift before 5 April 2023 may help avoid:

  • the High Income Child Benefit Charge, where clawback starts for income above £50,000
  • the abatement of the personal allowance when income exceeds £100,000
  • higher and additional rates of tax (intermediate, higher, and top rates in Scotland).

Tip: repayment potential

If you pay tax at more than the basic rate, you are entitled to claim tax relief at your top rate of tax on the donation. This means that you get the difference between the basic rate and higher rate tax on the donation. In the year to April 2022, HMRC statistics suggest that some

£540 million was due in such relief. Many higher rate taxpayers, however, fail to claim the repayment due.

A repayment claim is made either via the self assessment tax return, or by asking HMRC to amend the tax code. Make sure there is a valid Gift Aid declaration in place for all gifts, and that you record the date, amount of each gift and name of the recipient charity to back up your claim.

Timing is everything

A carry back election can be made, meaning Gift Aid donations are treated as if made in the previous tax year – something which can be of benefit, for example, where income is uneven. Strict time limits and other rules apply here, and we are happy to advise further.

Tip: decide which tax year to use

If you are likely to pay higher or additional rate tax (top rate in Scotland) in 2023/24, Gift Aid donations in that year should have the potential for a larger repayment. If you are making any substantial donation, and you have discretion over timing, consider whether a donation in 2023/24 is preferable to one in 2022/23.


HMRC statistics in 2021 showed a tax gap attributable to Gift Aid of around £179 million: that’s the figure claimed by donors who are not, in fact, eligible to use the scheme. It’s always important to check that you have enough income tax or capital gains tax in charge to cover Gift Aid donations. Where there is an error, the donor rather than the charity or CASC, has to make good the shortfall.

Here to help

Please do not contact us to discuss any of the issues raised here.

For other year end tax planning opportunities including potential for director-shareholders, income tax rates and allowances, tax and family, savings and investments and capital gains tax, download our ‘Year End Tax Planning Guide’.

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