Gift AidThe Government’s Gift Aid scheme is the most common way of claiming back tax on charitable donations. Through Gift Aid, any charity you donate to can claim a further 25% direct from the Government.
To donate through this scheme, you’ll need to complete a declaration to confirm you’re a UK taxpayer. You MUST have paid enough tax to be eligible to tick ‘yes’ to Gift Aid. Then, if you’re a basic rate taxpayer, there’s nothing more to do. The extra 25p per pound will get paid straight to the charity to top up your donation.
If you pay above the basic rate of tax, you can claim a tax rebate on your donation for the difference between the basic rate and your rate of tax. So, if you donate £100 to charity as a UK taxpayer, the Gift Aid scheme will top this up, making it a £125 donation. If you’re a higher rate taxpayer, you can then claim back 20% tax relief on this amount. I.e. £125 x 20% = £25, which goes straight into your pocket. You can claim this back through your self-assessment tax return, or by asking HMRC to alter your tax code.
Retail Gift AidYou can also get tax relief if you donate goods – rather than money – to a charity. This is, of course, providing the charity operates Retail Gift Aid. This includes Capital Gains Tax relief, if applicable.
For example, if you donate a pram to a local charity shop that operates Retail Gift Aid, the shop will act as an agent and sell the goods on your behalf. Once sold, the money received (net of their fee) gets classed as a cash donation. The charity will then provide you with a letter advising the value at which they sold it. If you’ve completed the declaration for Gift Aid, they can claim the additional tax via the Government. As with monetary donations, you can claim more tax relief if you pay a higher rate of tax.
Payroll GivingMany employers operate Payroll Giving schemes. This means that you can donate to charity straight from your salary. This is done before tax gets deducted from your income. You’ll therefore pay no Income Tax on the money you give.
Payroll Giving must be paid through PAYE from your wages or pension. If you’re an employee, the amount of tax relief you’re entitled to is dependent on the rate of tax you pay. The breakdown is as follows (excl. Scotland). To donate £1, you pay:
- 55p if you pay an additional rate of tax
- 60p if you pay higher rate tax
- 80p if you’re a basic rate taxpayer
Donating as a Sole TraderFor sole traders, or those involved in partnerships, charitable donations are not considered as ‘essential’ to your business’s running costs. So, if you make the donation through the business’s bank account, the payment will need to recorded as a ‘non-business’ transaction. Gift Aid will still be available.
As a higher or additional rate taxpayer, you’re entitled to claim the difference between the basic rate on your donation and the rate of tax you pay. You can do this through Self-Assessment or by getting HMRC to change your tax code.
Donating via a BusinessYou can also make donations direct from your Limited Company. It’s important to keep any documentation in support of your donation. This is because it can then be included as a business expense.
If you donate to a registered UK charity, your company will be able to claim Corporation Tax Relief on your donation. However, this donation would not fall under the Gift Aid scheme.
It’s not just money that you can contribute to charity either. You can donate any items that your business makes or sells, as well as excess equipment. This includes things like computers and tools. What’s more, you can also claim Capital Gains Allowance against the value of your donation.
Donating Land, Property or SharesYou don’t have to pay tax on any property, land or shares that you donate to charity. You’ll get tax relief on both Income Tax and Capital Gains Tax. You must keep records of your donations to prove that you’ve made a gift or sale and that the charity has accepted it.
For more information on this type of donation, click here.
Leaving Gifts in Your WillIn the executing of your will, your donation will be taken off the value of your estate. This is done before the calculation of Inheritance Tax.
If 10% or more of your estate gets left to charity, your donation will reduce your Inheritance Tax rate. It’s up to you whether you donate an item/s, a fixed amount of money, or what remains once other gifts / sums have been distributed.
You can find further details about tax relief and charitable donations, here.
The Danbro FoundationThe Danbro Foundation is a not-for-profit organisation. We’re devoted to improving the lives and prospects of those who need it most. Our goal is to provide underprivileged people with optimism, opportunities and hope for the future.
The Danbro Foundation ‘shares the company’s success’. ‘We commit both time and financial resource to provide opportunity and support to those in need’.
The Foundation’s Executive Committee comprises employees from across the Danbro Group. The committee give up their personal time to make the key decisions in relation to funding, marketing and charitable efforts. We work with local groups, such as Aspired Futures and Street Angels, as well as international charities like Operation Orphan. The Danbro Foundation formalises the way in which the company gives back. It enables those who help generate our profits to have a bigger say in how money is being spent.
You can find out more about the Danbro Foundation, and the company’s 2025 plan, here.
Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.
His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.
He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.