The UK government understands the vital role charities play in our health and wellbeing as well as for creating positive social impact in our communities. That’s why individuals and corporations can access tax relief when making charitable donations. It’s a mutually beneficial incentive to encourage more charitable giving across the UK.
What is charitable giving?
Charitable giving includes a range of activities. It’s much more than giving cash or online donations, although these are a significant portion of charitable donations. Charitable giving can also include volunteer time, non-cash contributions, including goods, land, or shares, and gift aid.
Tax relief on charitable donations
What tax relief you can claim depends on the type of charitable donations you are making. There are different options available, including using Gift Aid, through a Payroll Giving scheme, in your will, and through land, property or shares.
Gift Aid
When you use Gift Aid, the charity or registered community amateur sports club (CASC) can claim an extra 25p for every £1 you give. It doesn’t cost you any extra! You just need to make sure you’ve paid enough tax elsewhere to cover what the charity or CASC is going to claim.
Payroll Giving scheme
Using a Payroll Giving scheme, you can donate to charity straight from your wages or pension. This donation will come out before your tax is deducted from your income. The amount of relief you’ll get is dependent on the rate of tax you pay. In 2026, based on a £1 donation, you’ll pay 80p as a basic rate taxpayer, 60p as a higher rate taxpayer, and 55p as an additional rate taxpayer. Please be aware that the rates are also slightly different if you live in Scotland.
Charitable gifting in your will
If you are leaving gifts to charity in your will, the donation will be taken off the total value of your estate before inheritance tax is calculated. If you want to leave more than 10% of your estate to charity, your inheritance tax rate might also be reduced. What to bequest to charity is entirely up to you. You can leave a fixed cash amount, specific items, or what is left after other gifts have been given.
Please make sure to consult with a professional if you are planning to leave gifts to charity in your will to ensure it is legally binding.
Donating land, property or shares
When donating land, property or shares to charity, you do not have to pay tax on them. You’ll get a relief on both income tax and capital gains tax when making this kind of charitable donation. It’s important that you keep detailed records of these donations and include a document showing that your chosen charity has accepted it in order to benefit from the relief.
Limited companies and charitable giving
Limited companies are able to claim corporation tax relief on their charitable donations. In this case, you essentially treat the gift as a business expense. You can take the amount from your profits before any tax is calculated. You could also pay less corporation tax if you give or sell land, property or shares in another company to a charity.
In a limited company, you can also make other types of charitable contributions. If you give equipment to charity that has previously been used by your company, you can claim full capital allowance for the cost.
If an employee volunteers for a charity in work time, or they temporarily work for the charity as a secondment, you can deduct the wages you’ve paid them during this time as a business expense.
Find out more about business financial planning from our experts, here.
Want to know more about increasing your tax efficiency?
By utilising the different tax reliefs available, you become must more tax efficient. Talk to our independent financial advisers today about charitable donations and other tax relief options. We’ll help you meet your legal obligations while finding ways to save.