How this is calculated
When you make a Gift Aid donation, the charity treats your payment as if it had already had basic rate tax deducted, and reclaims that tax back from HMRC. For 2026/27 this means a £100 donation is grossed up by dividing by (1 minus 20.0%), so the charity actually receives around £125, with HMRC funding the extra £25.
If you pay tax at the higher or additional rate, you can claim the difference between your marginal rate and the basic rate on the grossed-up donation through your self assessment tax return, or by asking HMRC to adjust your tax code. This is relief for you personally, not an extra payment to the charity.
For a higher rate taxpayer, this means a £100 net donation effectively costs around £75 after the extra relief is claimed back, because you are getting tax relief on income you would otherwise have paid tax on at 40%, before deducting the basic rate the charity already reclaims.
Common Gift Aid pitfalls
You must have paid enough income tax or capital gains tax in the year to cover the tax the charity reclaims on all your donations combined. If you have not, HMRC can ask you to make up the shortfall personally, which often catches lower earners and pensioners who have used their personal allowance and paid little or no tax.
Company directors on very low salaries topped up mainly by dividends should check their total tax paid covers their Gift Aid donations, since dividend tax at the basic rate does count, but a very small taxable income overall may not be enough.
Making the most of Gift Aid
Higher and additional rate taxpayers who forget to claim the extra relief on their tax return are effectively leaving money with HMRC rather than either keeping it or giving more to charity; it is one of the more commonly missed reliefs on self assessment returns.
You can also elect to carry back a Gift Aid donation to the previous tax year if it helps use relief more effectively, provided the election is made before or at the same time as filing that year's tax return and before its filing deadline.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
Do I need to do anything for the charity to claim Gift Aid?
Yes, you need to make a valid Gift Aid declaration, usually a simple tick-box or form confirming you are a UK taxpayer, which most charities collect at the point of donation.
What if I don't pay enough tax to cover my donations?
HMRC can ask you to pay the shortfall in tax that the charity has reclaimed on your behalf, so it is worth checking your total annual tax paid against your total Gift Aid donations, particularly if your income is low or mostly dividends.
Can I claim relief for donations made by my company instead?
Companies do not use Gift Aid; instead, a limited company gets corporation tax relief by deducting qualifying charitable donations directly as a business expense before calculating taxable profit.
Can I backdate a Gift Aid claim to last year?
Yes, you can elect to treat a donation as if made in the previous tax year, which can be useful if you were a higher rate taxpayer last year but not this year, provided the election is made in time when you file your tax return.