Gift Aid in the UK: How charities can maximise claims
Gift Aid is one of the most valuable tools available to UK charities.
Gift Aid allows organisations to claim an extra 25% on eligible donations from UK taxpayers turning every £1 into £1.25 at no additional cost to the donor.
In the year to April 2025, charities claimed £1.7 billion in Gift Aid from HMRC, so for charities, this can mean thousands of pounds in additional income each year.
What is Gift Aid?
Gift Aid is a government scheme that lets charities reclaim the basic rate of tax (currently 20%) on donations made by UK taxpayers. To qualify:
- The donor must have paid enough Income Tax or Capital Gains Tax to cover the Gift Aid amount.
- The charity must hold a valid Gift Aid declaration from the donor.
Eligibility criteria
Charities must be:
- Registered with HMRC for Gift Aid.
- Recognised as a charity for tax purposes.
- Able to maintain accurate records of donations and declarations.
Donors must:
- Be UK taxpayers.
- Provide a Gift Aid declaration (written, verbal, or online).
How to maximise Gift Aid claims
There are several key strategies for charitable organisations to boost their Gift Aid income, including:
1. Streamline Gift Aid declarations
Make it easy for donors to opt in by:
- Using online forms with clear Gift Aid prompts.
- Including Gift Aid tick boxes on paper forms and event materials.
- Offering verbal declarations during phone donations (with proper recording).
2. Train staff and volunteers
Ensure everyone understands:
- What Gift Aid is.
- How to explain it to donors.
- How to collect and record declarations correctly.
3. Use Retail Gift Aid
If your charity runs shops, you can claim Gift Aid on the sale of donated goods. Donors sign up to the Retail Gift Aid scheme, the charity notifies them of the sale proceeds, the proceeds are treated as donations and Gift Aid is claimed.
4. Audit your records
Regularly review:
- Gift Aid declarations - Ensure they’re complete and valid.
- Donation records - Match amounts and dates.
- Donor eligibility - Check tax status if needed.
5. Claim on sponsored events
Encourage fundraisers to use platforms like JustGiving or Enthuse, which support Gift Aid so the charity can:
- Ensure donors tick the Gift Aid box.
- Monitor and reconcile claims from third-party platforms.
6. Claim on membership fees (if eligible)
Some membership subscriptions qualify for Gift Aid if they provide minimal benefits. Check HMRC guidelines and structure your membership accordingly.
7. Submit claims promptly
Use HMRC’s Charities Online portal to submit claims regularly. You can claim up to four years after the donation date (either from 5 April or your accounting year end depending on whether your charity is incorporated), but timely submissions improve cash flow.
8. Promote Gift Aid year-round
Include Gift Aid messaging in:
- Newsletters
- Donation pages
- Event signage
- Social media campaigns
9. Gift Aid Small Donations Scheme (GASDS)
This has been designed to make it easier for charities to access additional funds for small cash donations up to £30 per donation. There are different regulations to follow but overall there is less administration.
Common pitfalls to avoid
- Missing or incomplete declarations.
- Claiming on non-eligible donations (e.g., company donations, non-taxpayers).
- Failing to notify donors in Retail Gift Aid schemes.
- Not updating records when donors change address or tax status.
We’re here to help
We are here to support you with understanding the rules surrounding Gift Aid, training your team and auditing Gift Aid processes and returns to ensure you are claiming correctly and maximising your return. Please get in touch with a member of our specialist team or speak to your usual Azets adviser.
