Gift Aid

Tythe uses Gift Aid from the government to help us keep running a free and sustainable service. As a nonprofit initiative, any money we receive goes towards making Tythe the best it can be, in part by funding our independent research and helping us communicate the tangible impact our donors are making.

What is Gift Aid?

Gift Aid is a tax incentive that enables tax-effective giving by individuals to charities in the UK. It allows charities to claim back tax that their donors have paid to HMRC and in some cases allows donors to claim back tax for themselves.

Basic example

Suppose you get paid £100 for a job you've done, or from a pension you receive. In most cases in the UK you'll be taxed 20% on that money which means you'll keep £80. If you decide to donate that £80 to a charity, Gift Aid allows the charity to claim £20 from HMRC, resulting in the charity receiving £100, as if you'd donated the full amount pre-tax.

Higher rate taxpayers

The basic Gift Aid that charities claim assumes your income is taxed at 20%. But if your income is taxed at a higher rate, for example if you earn more than £50k, you can also claim Gift Aid for yourself. The amount you can claim is equal to a percentage of the total amount the charity receives, based on the difference between your tax rate and the basic tax rate.

Higher rate example

Suppose again you get paid £100 but this time you're in a 40% tax band so you only keep £60, which you then decide to give to a charity. Gift Aid naively assumes the £60 donation was the result of income taxed at the basic rate of 20%, so the charity can claim £15 from HMRC, making the gross value of the donation £75.

Now you're allowed to personally claim the difference between your actual tax rate and the basic tax rate (40% - 20% = 20%) on the gross value of the donation. This amounts to £75 x 20% = £15. The net result is that you've given £45 after tax, the charity receives £75 in total and HMRC keeps £10.

Here are some more examples, this time of making a £100 donation after tax:

Tax RateDonation (after tax)Charity Gift AidPersonal Gift AidYou've paidCharity receivesHMRC keeps
20%£100.00£25.00£0.00£100.00£125.00£0.00
40%£100.00£25.00£25.00£75.00£125.00£16.67
45%£100.00£25.00£31.25£68.75£125.00£25.57

The personal tax reclaim is done through your self assessment tax return, or by asking HMRC to amend your tax code.

Gift Aid eligibility

Gift Aid can be claimed on your donations if you pay tax on any of the following in the UK:

  • a wage or pension
  • income reported in a self-assessment form
  • investment income or taxable savings e.g. in a building society
  • capital gains tax e.g. on the sale of property or shares

Gift Aid can be claimed on donations up to a cummulative total value of 4 times what you pay in tax e.g. if you pay £3k tax in a particular tax year, Gift Aid can be claimed on donations up to a cummulative total value of £12k.

Further reading

https://www.gov.uk/donating-to-charity/gift-aid