New research from CAF shows that the public are aware of how important this tax relief is to charities, as three-quarters (77%) of people say that charities rely on Gift Aid. Gift Aid is worth £1.6bn to the UK’s charity sector, and benefits more than 66,000 charities across the UK according to HMRC.
The vast majority (80%) of people surveyed think that people should be encouraged to donate with Gift Aid when they are eligible. However, Gift Aid is still underused by many full-time employees who pay income tax and donate to charity.
Gift Aid is a tax relief for charities in the UK which effectively increases the value of donations. When UK taxpayers donate, the charity can claim an additional 25% of the value of the donation. That means for every £10 donation made to the charity, they can receive £12.50. Higher and additional rate taxpayers can claim back the difference between higher rate and basic rate tax on the value of their donations in personal tax relief or to increase their donation.
In 2024, half (51%) of donors say they always use Gift Aid on donations according to CAF’s long-running UK Giving research. However, a quarter (26%) of donors said they only sometimes used Gift Aid on their donations. The reasons why people only sometimes use this benefit include under half (46%) who say it is not always an option, and nearly a quarter (24%) who say it’s not possible when they donate with cash. However, 11% say it’s too much effort and nearly a quarter (24%) don’t always remember.
The process for claiming Gift Aid is complicated for charities and donors given the variety of ways people donate – including in cash, via text or donating goods. As a result, an estimated £560m of Gift Aid relief goes unclaimed every year, according to the Charity Finance Group, and ends up with the Exchequer rather than charitable causes.
Mark Greer, Managing Director at the Charities Aid Foundation, comments:
“Gift Aid is extremely valuable to donors and the charities they want to support and it’s clear the public recognise this. But we know it is underused by donors and can be complicated for charities to claim. When an eligible taxpayer donates and forgets to tick the box, the charity misses out.
“Charities are under pressure with demand for their services continuing to increase. Modernising the system to automate Gift Aid would be a vital step forward at a time when we need to boost charitable giving across the UK.”
Research from the VCSE Data and Insights National Observatory report found that a third of charities expect their finances to deteriorate in the coming months while a third expect them to stagnate.