Generous taxpayers could be missing out on millions in charity relief

Anyone paying higher or additional rate tax can claim back money on charitable donations — but many don’t know about this perk, says George Nixon

George Nixon, Senior Money Reporter

Saturday December 27 2025, 6.00am, The Times

For the generous givers who donated £15.4 billion to charity in 2024, a tax break is likely to be far down the list of motivations.

But the growing number of higher and additional-rate taxpayers have been warned not to let their generosity go unrewarded amid concerns that they are not making the most of tax relief.

Gift aid allows you to top up donations made to registered charities and community sports clubs by 25p for every £1, as long as donations in a tax year are less than four times what you paid in tax. Higher and additional-rate taxpayers can then claim back the difference between the tax paid on their donation and what they paid in income tax on the money in the first place through a self-assessment tax return.

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Only about 1.3 million taxpayers declared a charitable donation on their self-assessment return for the 2023-24 tax year, reclaiming £760 million. There were 6.95 million higher or additional-rate taxpayers that year.

HM Revenue & Customs expects higher and additional-rate taxpayers to claim back £820 million in charity tax relief in the 2024-25 tax year, according to a Freedom of Information request by the financial services firm NFU Mutual.

Sean McCann from NFU Mutual said: “The amount being reclaimed has rocketed due to the increased number of people being dragged into the higher rate of income tax, but many higher-rate taxpayers are unaware of being able to reclaim tax relief on their gift aid donations so miss out. They can reclaim up to 20 per cent of the total donation through their tax return or by contacting HM Revenue & Customs.”

Millions more have been dragged into higher-income tax brackets because the thresholds at which you start paying basic rate tax (£12,570) and higher rate tax (£50,270) have not changed since 2021. The freeze will last until at least 2031. The additional rate threshold was cut from £145,000 to £125,000 in 2022.

According to the Charities Aid Foundation, which provides donation processing services and advises charities and government, about 50 per cent of people donated to charity in 2024, giving an average of £72 a month and an overall total of £15.4 billion.

But although charitable giving during your lifetime is expected to bring in billions this year, separate research from the wealth manager Rathbones suggested that fewer people were leaving money to charity in their wills. Despite the reduction you get on inheritance tax if you donate, about 31 per cent of those who wrote wills this year left money to a charitable cause, down from 46 per cent in 2024, according to a poll of 1,022 adults.

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Charitable donations are taken off the value of your estate before inheritance tax is applied. If you leave more than 10 per cent of your estate to charity, the inheritance tax rate applied to any remaining value that is taxable is reduced to 36 per cent, instead of the normal 40 per cent.

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