Top considerations when setting up charitable giving in the UK

18 September 2023

The benefits of charitable giving go beyond the feel-good factor; there are also significant tax benefits available in the UK.

People who do well also want to do good.

Britain’s UHNW families are supporting charitable causes where they can have an impact.  

As posted in The Beacon Collective giving levels among some of the UK’s wealthy has increased. Last year collectively they gave £3.4 billion to charity – an increase of more than a billion on last year’s total giving according to The Sunday Times Giving List 2023. 

In our more recent past, the global pandemic provided people with an urgent reason to give. There was increased giving to healthcare-related causes, including the UK’s National Health Service. Many people had time to step back and focus on actioning their longer-term giving strategies. 

There’s research that shows supporting causes that are personally meaningful to you can enhance your life satisfaction. And the benefits of giving go beyond the feel-good factor. There are also significant tax benefits available in the UK. 

Below are points to consider on tax-advantaged giving strategies as well as options for charitable giving structures. 

Tax advantages to charitable giving in the UK – what’s available 

Gift Aid Scheme 

When an individual donates, a charity can claim back 25p for every £1 that is donated from the government through the UK’s Gift Aid scheme, provided the individual has paid sufficient tax in that tax year. 

From an individual donor’s point of view anybody who pays tax above the basic rate, can also benefit personally from the Gift Aid scheme. You can claim the difference between the rate you pay and the basic rate of your donation. For example, as a higher rate tax payer, you donate £100 to charity – they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%). 

Charitable Giving and Inheritance Tax Relief

In the UK, the rate of inheritance tax is 40% charged on the portion of an estate that is over the nil rate band reliefs and other available exemptions. 

However, if you donate to a registered charity in your Will, the value of the donation will be taken off the value of your estate before the inheritance tax is calculated. 

Also, if you donate at least 10% of your estate to a registered charity, the inheritance tax rate on the remainder of your estate may be reduced from 40% to 36%. A word of advice – inheritance tax planning and related calculations can be complicated. A professional can help you review your specific circumstances and provide guidance on steps you can take to mitigate your inheritance tax liability through charitable giving. 

Capital Gains Tax Relief

In the UK, if you donate shares or other assets that have increased in value since they were acquired, you can receive capital gains tax relief on the donation. You won’t have to pay capital gains tax on the increase in value of the donated assets.  

Charitable Giving Structures

Charitable Trusts

A charitable trust allows you to gift assets or cash to your trust; in turn, the trust distributes income or capital to charities of your choice. Charitable trusts are exempt from income tax, capital gains tax, and inheritance tax. 

Provided the charitable trust deed is drafted widely the donor has flexibility to make changes to the organisations they are supporting over their lifetime and beyond. This benefits you in a few different ways. 

First, family members may want to support different causes. An appropriately structured charitable trust provides a family with flexibility to do this. 

Also, by drafting a Letter of Wishes, which can be regularly updated, your trustees can be guided to change course to reflect different circumstances or any new philanthropic interests. This is especially pertinent for trusts that are structured to go on in perpetuity. Perhaps after you’re gone a beloved charity no longer exists. If that’s the case, a professional trustee can ensure your trust will support other causes that reflect your original intention. 

Charitable Incorporated Organisations

Charitable Incorporated Organisations or CIOs were introduced in the UK in 2013. They are legally structured as a company instead of a trust but have a simpler regulatory regime than ordinary companies as they require registration with The Charity Commission only.  

A CIO structure gives a charity legal capacity to do things in its own name because, like a charitable company, it is a legal entity with separate legal personality. This means it can employ staff, own freehold property, and take on leasehold property for example.  

Donor-Advised Funds

Donor-Advised Funds are a simplified way to enable charitable giving. You contribute to a fund that pools funds from various donors and then donates your funds to a charitable organisation of your choice. But you won’t have the ability to choose your trustee(s) or investment adviser because this is looked after by the fund.  

What to Look for in a Trustee

Experience, Longevity, and Structuring Know-How 

Given the overall responsibilities and complexities that come with taking on trustee and corporate obligations, it’s important to choose a trustee who has experience working with a variety of clients and structures. Equally important is the longevity of your trustee. 

Because of these factors, you may want to consider working with a professional trustee instead of a family member or friend. 

At ZEDRA, we are actively involved in administering trusts (started with our predecessor firm, Barclays) that were established as far back as the 1930s. In certain cases, our trust clients had no heirs, so their entire estates were gifted to charity. 

Some 80+ years on, in our role as professional trustee, we’re able to fulfil our clients’ wishes and continue their gifting strategy through their charitable trusts that are structured to continue into perpetuity. 

As part of our role, we will also vet charitable organisations that you are donating to, on your behalf. 

Finally, in addition to proper structuring of your overall charitable giving, a professional trustee can manage the legal, compliance, regulatory, cash management, and tax related matters related to it. 


Charitable giving is highly personal. Taking the time to find the right charitable causes that resonate for you personally is key. There are varying charitable giving structures available in the UK along with associated tax-advantaged benefits to consider. Given the overall complexities, it’s a good idea to consider appointing a professional trustee who is experienced in a range of charitable structures and has longevity on its side. 

How ZEDRA can help

At ZEDRA, we serve private clients who are interested in setting up structures to formalize their charitable giving both during their lifetimes, their heirs’ lifetimes, and into perpetuity. We have deep experience in structuring and administering charitable trusts of varying sizes and objectives. ZEDRA can help you determine which charitable giving structure best suits you, your family, and your philanthropic interests. 

For more information on how we can help you in the UK, please contact Sue Wakefield, Director.

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