How to help your donors reclaim their tax relief

Over 11 million people are due to file a 2024-25 tax return by 31 January 2026. 

As your church or charity’s donors complete their returns, you can help your donors to boost their generosity by providing the information they need to reclaim personal tax relief on their charitable giving.

Are your donors missing out on tax relief?

You’ll be aware of the Gift Aid scheme, under which UK charities can claim back an amount equal to the 20% basic rate tax paid by a donor who gives a Gift Aid declaration.

However, if your donor has a taxable income of more than £50,270, their Gift Aid declaration is not the end of the story. These donors pay tax at 40% (higher rate) on income over £50,270 and 45% (additional rate) on income over £125,140. Yet your church or charity can still only claim relief at 20%, so what happens to the extra tax they’ve paid?

The answer is that your donors can reclaim this extra tax personally. This personal relief is worth 25p (or 31.25p) for every £1 a higher (or additional) rate taxpayer gives. It can be very valuable by reducing the tax that your donors pay, meaning your donors can be even more generous in support of your cause (see the example below).

If your donor is a Scottish taxpayer, the personal reclaim starts at an income of over £26,561 and can reach 35p per £1 they’ve given (see our blog: Scottish taxpayers: How to boost your charitable impact with tax relief).

The number of higher rate taxpayers has increased by almost 40% in the last three years (see Summary Statistics - GOV.UK), yet many donors don’t claim their personal relief, either because they are unaware of the opportunity or because they believe it would be too difficult.

What information should you provide to donors?

The personal tax reclaim presents an opportunity for your church or charity. If you can help your donors to reclaim their relief, their effective cost of giving goes down and so your donors may be able to give even more. For example, if a higher rate taxpayer gives you £100, you can reclaim £25 and the donor can reclaim £25. So a gift worth £125 effectively costs the donor £75.

At this time of year, many donors will be gathering the information they need to submit their tax return. Why not consider writing to your donors with a summary of their Gift Aided giving in the period 6 April 2024 to 5 April 2025? You could take the opportunity to thank donors for their generosity, explain the impact their giving has had and encourage your donors to check whether they are eligible for personal tax relief (perhaps by pointing them to our blog: Taxable income over £50k? Why a Gift Aid declaration isn’t enough.)

Many of your donors will pay tax directly from their salary or pension under the PAYE system and might not even be aware that they are paying Income Tax at a higher rate, so it’s worth proactively raising the topic of personal tax relief.

How can donors claim personal relief on their giving?

A donor who doesn’t complete a tax return can claim their personal relief by phoning HMRC. For a larger claim, HMRC may require written details of the donations – this is where your thank you letter will help your donor.

HMRC requires a paper or online tax return from those who are:

• self-employed, company directors or in a business partnership
• letting out property
• receiving significant investments or savings income
• repaying the High Income Child Benefit Charge (see our blog: Giving - it can cost less than you think)

In the ‘charitable giving’ section of the tax return, your donor will find a box headed ‘Gift Aid payments made in the tax year’, in which they should include donations made to you and to any other eligible church or charity. The return will then automatically calculate whether any relief is due.

If your donor is an employee committed to regular giving, the donor can ask HMRC to change their tax code to take account of their higher or additional rate relief, so that they pay less tax through their payslip during the year rather than reclaiming a lump sum at the end.

If your donor’s income has gone down since last year (for example because they’ve retired or taken maternity leave) so that they are no longer higher rate taxpayers, they might want to maximise relief by asking HMRC to treat donations since 6 April 2025 as having been made in 2024-25 (see our blog: Why your donors might benefit from Gift Aid carry back )

Conclusion: “Give back to Caesar what is Caesar’s and to God what is God’s” – Matt 22:21 (NIV)

As a church or charity treasurer, you can help your donors to pay their taxes accurately by providing them with a summary of their giving for the tax year.

By making sure your donors are aware of the opportunity for personal tax relief, you can help them to maximise their generosity and perhaps afford to give even more. That way you help them give to Caesar what is Caesar’s but not to give him some of what could well be God’s!