Giving to charity feels good. Simple as that. Whether it’s helping vulnerable children, protecting the planet, or supporting your local food bank, the act of giving can bring real joy – and leave a legacy you can be proud of. But tax-efficient charitable giving feels even better!

Here’s something many people don’t realise: you can give more without spending more, just by being a bit smarter with your donations. The UK has a few clever systems in place that boost your gift or trim your tax bill – sometimes both.

Let’s walk through the main ways to make your giving go further without giving yourself a financial headache.

The Easy Win: Gift Aid

Gift Aid is the quickest and most hassle-free way to boost your donation. If you’re a UK taxpayer, all you have to do is tick a box when making a donation, and the charity can claim an extra 25p for every £1 you give. That’s free money for the charity, at no extra cost to you.

And it’s not just charities that benefit – community amateur sports clubs (CASCs) can claim it too.

If you live in Scotland: the figures might work slightly differently due to Scotland’s separate income tax rates, but the principle is the same.

A Hidden Bonus for Higher-Rate Taxpayers

Here’s where things get more interesting. If you pay income tax at 40% or 45%, you can claim extra tax relief on top of the Gift Aid. Most people don’t even realise this is a thing.

Let’s say you donate £100. The charity gets £125 thanks to Gift Aid. You then claim back £25 if you’re a 40% taxpayer – meaning the donation really only cost you £75.

You can claim this back via your self-assessment tax return, or (if you don’t usually fill one in) you can contact HMRC directly. For claims under £5,000, you can do it over the phone or online. Over £10,000? You’ll need to write in and include details like the date and recipient of your donation.

A little effort, sure – but well worth it.

Pay Roll Tax-Efficient Charitable Giving

If your employer offers Payroll Giving, this is arguably the most convenient way to give regularly – and get your tax relief upfront.

Donations come out of your gross salary (before tax), so you don’t need to claim anything back. It’s like pension contributions – clean, automatic, and tax-friendly.

Here’s how much you’d actually pay to give £1:

• 80p if you’re a basic-rate taxpayer
• 60p if you’re a higher-rate taxpayer
• 55p if you’re on the additional rate

If your workplace doesn’t offer this scheme, it’s worth nudging HR. If enough people are interested, they might bring it in.

Leaving a Legacy: Gifts in Your Will

Want to make an impact even after you’re gone? Leaving a charitable gift in your will is a powerful way to do it – and it can also help reduce inheritance tax (IHT).

Here’s how it works:

• Leave 10% or more of your estate to charity, and your IHT rate drops from 40% to 36%.
• Any assets you leave to a charity – like property, shares, or valuable items – are exempt from IHT.
• You could also consider a charitable trust, which shelters assets from IHT altogether. But fair warning – this one gets complex, so you’ll need proper advice from a financial planner or solicitor.

This isn’t just about saving tax – it’s about making a lasting difference with the wealth you leave behind.

Donating Assets Instead of Cash

This one flies under the radar, but it’s a smart move if you’ve got land, property, or shares you’re thinking of selling.

Donating these directly to charity can save you both income tax and capital gains tax (CGT). The value of the asset can be knocked off your taxable income, and you avoid any CGT you’d usually pay on a sale.

One catch: not all charities are set up to receive physical assets. Some may ask you to sell the asset on their behalf. If that’s the case, keep good records and a written request from the charity – this ensures you can still claim the relief when you do your self-assessment.

Is Tax-Efficient Charitable Giving for You?

Tax-Efficient charitable giving is one of life’s most fulfilling decisions – and when done wisely, you can give more than you thought possible without tightening your belt.

It’s not just about saving tax (though that’s a welcome bonus). It’s about making sure the causes you care about get every possible penny from your generosity.

If you’re planning to give more regularly or want to include charities in your will, it’s worth chatting to a financial planner. They’ll help you get it right – and avoid any nasty surprises from HMRC.

Because giving should feel good. And when it’s tax-efficient? It feels even better.

All information is correct as of June 2025, but subject to change depending on government policy.