Charities received £1.34bn in Gift Aid in 2021/22, a small fall compared with the previous year, according to government data.
Analysis of charity tax reliefs for the year ending April 2022, published this morning by HMRC, showed that Gift Aid was worth 3 per cent less compared with 2020/21.
The government stressed that this was mainly a result of additional risk assessments conducted in March and April. Most of the affected claims were paid after 1 April, and will appear in next year’s figures, HMRC said.
The value of the Gift Aid Small Donation Scheme, which is available to small charities claiming back tax on in-person donations, fell from £30m to £20m. HMRC said the decrease is “likely to be attributable at least in part” to Covid-19 restrictions.
Charity finance experts estimate that as much as £500m in potential Gift Aid is still unclaimed by voluntary organisations each year.
Total tax reliefs claimed by charities and donors was £5.4bn, barely changed from last year, the figures show.
This includes business rates relief for charities during trading, which was worth £2.4bn, and reductions available to charities when they buy and sell land, which was worth £230m.
Charity donors made £800m through tax reliefs on inheritance tax and a forecast £90m through relief on gifts of shares and property.
HMRC’s data shows that the average amount of charitable giving increases as people get older, with 55 to 64 year-olds giving the highest average donation of £3,470.
Donations also increase in line with gross income. Donors with incomes of more than £250,000 donated an average of £26,450. However, the proportion of income given to charity falls as donors’ gross income rises, HMRC said.
Richard Bray, chair of the Charity Tax Group, said: “Overall, it is positive that the value of tax reliefs for charities and donors has remained largely consistent with previous years.
“However, the lasting impact of the pandemic and recent inflationary pressures on the scale and effectiveness of tax reliefs will have to be monitored closely in future years. Transitional Relief from 2024 will provide an important cushion for charities when income tax rates change and recognises the importance of Gift Aid to the sector."
Bray continued: “CTG continues to work closely with HMRC to ensure that Gift Aid claims are made correctly and efficiently. Communication [by the government] with the sector is important where delays in paying claims arise, as Gift Aid is very important for many charities’ cashflow.”
Richard Sagar, head of policy at the Charity Finance Group, said: “We’re pleased to see these vital tax reliefs have generally retained their levels, particularly during the difficult circumstances of the past two years where face-to-face donations decreased dramatically.
“Rates of Gift Aid have held up, but with soaring levels of inflation it’s more important than ever to maximise the value of gift aid and encourage eligible donors to tick the box. Every penny will count in the coming months and years, and CFG and our partners will continue to provide support to charities, so that they can all make the most of this important tax relief.
Sagar said that the reduction in the value of the Gift Aid Small Donation Scheme was not surprising.
"However, it raises the question of whether the scheme is useful enough to those who can benefit from it given the decline in cash as a means of giving," he said.
“The overall amounts that can be claimed are relatively small and limited, but those amounts can make all the difference to smaller charities, particularly those that have been hit hardest by the pandemic and are now struggling to cope with increasing demand on services due to the cost of living crisis.”