Inefficient giving costs charities over £1bn

22 Nov 2011

  • Over £10 billion is donated by UK adults to worthy causes but a further £1.05 billion is lost to charities by failing to use tax relief schemes
  • Increased awareness of Gift Aid and Payroll giving could generate millions of extra valuable pounds for charities

Registered UK charities and community amateur sports clubs are losing out on over £1 billion this year as a result of people failing to donate tax-efficiently.  Research from,  the professional advice website, shows that donors do not make the most of tax breaks and as a result waste millions that could go to good causes.

In 2009 / 2010 UK adults gave a total of £10.6 billion to charity however, according to’s annual ‘Tax Action’ report (which focuses on the total amount wasted in tax each year), this amount could have been boosted by nearly 10% if donors had made the most of tax efficient donation schemes.

The £1bn which is currently retained by the taxman could instead make a real difference to charities if donors remembered to use tax relief schemes such as Gift Aid and Payroll giving.  Payroll giving (Give as You Earn) gives employees the opportunity to contribute a regular sum to a charity of their choice.  Payments are deducted from their salary by the employer before tax is deducted, so for example, if an employee who pays tax at the basic rate of 20 per cent donates £10 the actual cost is £8. If 40% tax payers donate £10 the cost of the donation is £6.

Gift Aid is a form of opt-in tax relief for UK taxpayers on money they have donated to charities, which allows the charity to reclaim basic rate tax on a donation. The charity will take the donation, which is money the donor has already paid tax on, and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on the 'gross' figure, which is the amount before basic rate tax (20 per cent) was deducted.  For example: if you give £10 using Gift Aid, the charity will benefit by £12.50.

Karen Barrett, Chief Executive of comments, “Although UK taxpayers are experiencing tough times, there are still millions of people donating generously to charity in a typical month.  It is unfortunate however, that charities are missing out on over £1bn as people fail to use gift aid and other tax efficient methods when donating.  Making just a few simple changes to the way we donate could mean even more money goes to our chosen charities.  Increased awareness of tax relief schemes would significantly impact the amount currently being wasted and whether you donate monthly or contribute one-off amounts, no matter how big or small, using the most tax-efficient methods of making donations will ensure worthy causes get the maximum amount of money possible.

“Seeking advice from an independent financial adviser can help you ensure that you are not throwing tax money away unnecessarily.  To find a local independent financial adviser who can advise you on being tax efficient you can go to and use our ‘Find an IFA’ search.”


  1. Tax Action Report 2011 has been carried out by Purple Market Research on behalf of

For more information contact:

Karen Barrett, Chief Executive, 020 7833 3131

Lisa Grando/ Emily Falla/Maddy Morgan Williams, Lansons Communications: 020 7294 3682

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Category: Tax planning Tagged: Tax Relief

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