Are Charitable Donations Tax Deductible in the UK?

11 November 2020

There are many reasons why you should consider charitable giving now more than ever. Whilst your focus may be on the philanthropic aspects of helping others, the tax treatment of such donations is worth consideration.

Below we explore the tax relief available to charitable donations and the benefits of lifetime versus legacy charitable giving.

It is sadly true that many charities are victims of the current global pandemic and face years of needing increased support to regain lost revenue. This year, there is an estimated £10.1bn funding shortfall within the charitable sector.

Against this backdrop, it is uplifting to read that people are increasingly making charitable gifts by Will – particularly high net worth individuals (HNWIs) – with the most recently available data from HM Revenue & Customs (HMRC) indicating that gifts of over £1m to charities on death has increased by 31%.

Whilst gifts in Wills are extremely valuable to charities and account for around a third of their voluntary income, charitable gifting in lifetime may be more beneficial personally to HNWIs and will certainly provide much relied upon revenue to charities when they most need it.

Tax relief on charitable donations

Charitable gifting during lifetime is extremely tax efficient with tax reliefs such as Gift Aid providing the opportunity in principle to claim back the difference between basic rate and higher tax rates on charitable donations. This, of course, is additional to the increased 25% value of the donation to the charity.

Gifts to charities are also exempt from inheritance tax and capital gains tax, assets being gifted are treated as being disposed of at a nil value.

We should also not forget the social and moral benefits to gifting; quite simply it feels good to help others and there are reports of less stress and anxiety and even improved life expectancy for those who regularly support charitable organisations.

Bringing all of these aspects together and creating a charitable trust or foundation in lifetime delivers not only the financial benefits and tax saving opportunities on an ongoing basis, but provides a family bond in a shared goal of making a difference in the knowledge that their family’s legacy will continue; arranging this now will also help the charitable sector in it’s time of urgent need.

If you would like to know more about charitable giving during lifetime or creating a charitable trust, please call us on 01565 748 808 or email

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