UK Gift Aid (2026/27): Higher-Rate Tax Claim Back Guide
Gift Aid 2026/27: charities add 25%, higher and additional-rate donors claim the rest back, plus the effect on HICBC, the £100k taper and IHT at 36%.
How Gift Aid works
Part 1: the charity claims
- You give £100 and make a Gift Aid declaration
- The charity claims £25 from HMRC
- The charity receives £125 in total
- That is basic-rate tax on the grossed-up gift
Part 2: you claim (higher and additional rate)
- Higher rate (40%): £25 per £100 given
- Additional rate (45%): £31.25 per £100 given
- Claimed on your Self Assessment return or through your tax code
- Arrives as a lower tax bill, a refund or a tax code change
Worked donor scenarios (2026/27)
| Scenario | You give | Charity gets | Your Income Tax saving | HICBC saving | Cost to you |
|---|---|---|---|---|---|
| Basic-rate donor (£30,000 income) No higher-rate relief to claim. | £400 | £500 | £0 | £0 | £400 |
| Higher-rate donor (£80,000 income) All of the gross gift is relieved at the higher rate. | £1,600 | £2,000 | £400 | £0 | £1,200 |
| Higher-rate donor with HICBC (£70,000 income) Gift lowers adjusted net income, so the Child Benefit charge falls (2 children). | £4,000 | £5,000 | £1,000 | £584 | £2,416 |
| Donor in the £100k taper (£105,000 income) Gift restores Personal Allowance as well. | £4,000 | £5,000 | £2,000 | £0 | £2,000 |
| Additional-rate donor (£200,000 income) Gross gift moved out of the additional-rate band. | £8,000 | £10,000 | £2,500 | £0 | £5,500 |
Income is employment income in England, Wales or Northern Ireland, with no other income. The Income Tax saving is the tax with no gift minus the tax with the gift. Gift Aid does not reduce National Insurance. In the taper scenario, adjusted net income falls to £100,000, which also brings the donor within the Tax-Free Childcare limit; that benefit depends on childcare costs and is not counted.
Tests based on adjusted net income
- Personal Allowance taper (£100,000 upwards): each £2 of grossed-up gift restores £1 of allowance. Together with the higher-rate relief, the total relief on a gift in this band, including the basic rate the charity claims, is 60% of the gross gift.
- High Income Child Benefit Charge (£60,000 to £80,000): 1% of Child Benefit for every £200 of adjusted net income above £60,000. For two children (£2,337 a year), each £200 of grossed-up gift removes £23 of charge.
- Tax-Free Childcare: not available if you or your partner expect adjusted net income over £100,000. The top-up is up to £2,000 a year per child (£4,000 if disabled).
Inheritance Tax at 36% for charitable legacies
For deaths on or after 6 April 2012, the rate falls from 40% to 36% where at least 10% of the baseline amount passes to charity (IHTA 1984 Sch 1A). The baseline deducts the nil-rate band, including any transferred band, but not the residence nil-rate band, and adds back the charitable legacy.
Worked example: a single person with a £800,000 estate, no home passing to descendants. Without a legacy, Inheritance Tax is £190,000 and beneficiaries get £610,000. A £47,500 legacy (10% of the £475,000 baseline) brings the tax to £153,900 at 36%, and beneficiaries get £598,600: £11,400 less, while the charity gets £47,500.
Estates with several components (for example trusts or jointly owned property) apply the test to each component. HMRC's reduced rate calculator works out the amount needed.
Payroll Giving
Donations are taken from pay before Income Tax but after National Insurance, through a Payroll Giving agency your employer uses. The charity cannot claim Gift Aid on them.
Higher-rate employee, £100 a month: the charity gets £1,200 a year and the donor's cost is £720. Giving £960 through Gift Aid gives the charity the same £1,200 and, after the higher-rate claim, costs the same £720. The difference is timing and paperwork: Payroll Giving gives the relief immediately with no claim.
Related guides
- Higher-rate tax 40% guide - the higher-rate threshold.
- £100k tax trap - the Personal Allowance taper.
- Child Benefit tax charge (HICBC) - the charge Gift Aid can reduce.
- Tax-Free Childcare worked examples - the £100k limit.
- IHT couple calculator - nil-rate bands and the 36% rate.
- UK IHT rules guide - full inheritance tax framework.
- Max pension contribution calc - another way to reduce adjusted net income.
- Salary sacrifice 2026/27 - reducing pay before tax.
Frequently asked questions
How does Gift Aid work?
If you give a Gift Aid declaration, the charity or community amateur sports club claims basic-rate tax on your gift: £100 becomes £125. Your gift is treated as made after deducting basic-rate tax (ITA 2007 s.414). The charity must have an HMRC charity reference number. Your gifts qualify only if they are not more than 4 times the Income Tax and Capital Gains Tax you paid in the tax year; if the charity reclaims more than you paid, HMRC can charge you the difference (s.424).
How much can I claim back as a higher-rate taxpayer?
The difference between your rate and the basic rate on the grossed-up gift. GOV.UK's example: you give £100, the charity claims Gift Aid to make it £125, and at 40% you claim back £25 (£125 x 20%). At 45%, the same gift gives back £31.25. The relief works by raising your basic and higher rate limits by the grossed-up gift. Claim it on your Self Assessment return, or ask HMRC to amend your tax code. Scottish taxpayers can also claim, at their own rates.
How does Gift Aid affect adjusted net income?
Adjusted net income is reduced by the grossed-up gift (ITA 2007 s.58), so £800 donated reduces it by £1,000. That matters for three tests based on adjusted net income: the Personal Allowance taper above £100,000 (£1 of allowance lost per £2 of income), the High Income Child Benefit Charge (1% of Child Benefit for every £200 above £60,000, all of it at £80,000), and the £100,000 limit for Tax-Free Childcare.
Can I carry Gift Aid back to the previous tax year?
Yes. Under ITA 2007 s.426 you can elect to treat a gift as made in the previous tax year. The election must be made on or before the date you send the previous year's return and no later than its filing deadline (31 January online, 31 October on paper), and the tax you paid in that year must cover the gifts. It is useful if you paid higher-rate tax last year but will not this year, or simply to get relief sooner.
What is Payroll Giving?
A separate scheme run through PAYE. The donation is taken from your pay before Income Tax but after National Insurance, so you get Income Tax relief at your rate and no NI relief. The charity cannot also claim Gift Aid on it. For a higher-rate taxpayer giving £100 a month, the charity gets £1,200 a year and the cost to you is £720. Through Gift Aid, £960 donated gives the charity the same £1,200 and you reclaim £240, also £720. Your employer must run a scheme through a Payroll Giving agency.
What is the Gift Aid small donations scheme?
GASDS lets a charity or CASC claim 25% on cash donations of £30 or less, and contactless card donations of £30 or less collected on or after 6 April 2019, without a Gift Aid declaration. The maximum is £2,000 a year (on £8,000 of donations). The claim cannot be more than 10 times the charity's Gift Aid claim in the same tax year, and the charity must have claimed Gift Aid in that year without a penalty in the last 2 years. It is a scheme for charities, not donors.
What is the 36% Inheritance Tax rate for charitable legacies?
For deaths on or after 6 April 2012, Inheritance Tax is charged at 36% instead of 40% if at least 10% of the "baseline amount" goes to charity (IHTA 1984 Sch 1A). The baseline is the estate after deducting the nil-rate band (including any transferred nil-rate band) and adding back the charitable legacy; the residence nil-rate band is not deducted. Example: a single person leaves £800,000, with no home passing to descendants. The baseline is £475,000, so a £47,500 legacy qualifies. Tax falls from £190,000 to £153,900, and the other beneficiaries receive £11,400 less while the charity receives £47,500.
Can I claim Gift Aid on donations to overseas charities?
Gift Aid applies to donations to charities and CASCs that have an HMRC charity reference number. Ask the charity whether it has one before relying on the relief. Many international organisations have a UK-registered charity that can accept Gift Aid donations; a donation made directly to a foreign organisation without one does not qualify.
What records should I keep?
If you pay higher-rate tax and claim relief through Self Assessment or your tax code, keep records showing the date, the amount and which charities you gave to. GOV.UK says you normally have to keep them for at least 22 months from the end of the tax year they are for (longer if you are self-employed or file late). Tell the charity if you stop paying enough tax, or for any tax years where you did not. If you claim relief without filing a tax return, HMRC needs the amount donated, and for claims on £10,000 or more also the date and the recipient.
Can I claim Gift Aid on goods given to a charity shop?
The sale of donated goods does not qualify by itself. Under Retail Gift Aid, you appoint the shop as your agent to sell the goods; it tells you the net proceeds after any commission, and if you agree those proceeds become your Gift Aid donation. You need to have given a Gift Aid declaration, and the shop must follow one of HMRC's methods, including writing to you about the proceeds.
How do I make a Gift Aid declaration?
The charity gives you a form or online tick-box. You need a declaration for each charity. It can cover current and future donations and all donations made in the last 4 years. You must have paid enough Income Tax or Capital Gains Tax to cover what the charity reclaims, and tell the charity if that stops being true.