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By Ross Palmer, Tax Director, Sayer Vincent

Since its early beginnings in 1990 and following its expansion in scope in 2000, Gift Aid has raised tens of billions of additional funds for charities across the UK making a phenomenal contribution to their overall fundraising efforts. The premise from day one was that charities should be able to reclaim the tax already paid on donations made by UK taxpayers, and they have done so with gusto.

Encouragingly, the number of charities receiving Gift Aid continues to increase, following a brief period when it declined, and in 2024-25 around half the value of gift aid payments went to charities that received less than £1m each, thereby demonstrating its impact where it is needed most.

However, each year The Charity Finance Group reports on the extent to which charities are missing out on potential claims.

And it’s far from being an insignificant sum. Last year, it was estimated that missed Gift Aid claims were worth somewhere in the region of £560m and seeing as this is across the entire sector, it is likely that smaller organisations are missing out disproportionately.

A myriad of reasons may be driving this shortfall.

Donor confusion can occur when there is uncertainty as to whether they’re eligible to donate via the scheme or not. Similarly, donors can demonstrate concern that they may be giving too much, thereby potentially exposing themselves to an unexpected tax bill.

These challenges are further compounded by the administrative burden (whether real or perceived) placed on charities to accurately record the donor’s details, an issue which is further amplified when one considers the extent of cash donations, especially for smaller organisations, that are made without donor details being collected at all.

For a scheme based on such a simple premise, many organisations have cited its complexities and the time it consumes to accurately manage donations that are eligible for the Gift Aid uplift, as limiting factors in their efforts to claim more from the scheme.

It all leads to the question, has Gift Aid become hassle than its worth?

In short, I’d argue that no, it has not.

Certainly, it may not be as straightforward as it was originally intended to be but with some careful planning and systems and access to the right support, Gift Aid can still be a very rewarding income stream for most, if not all, charities.

1. Seek guidance and support if you’re unclear on which fundraising sources are and are not eligible for Gift Aid claims.
2. Educate yourself and your team so that you can effectively communicate, in plain and simple language, what Gift Aid means at the point of donation.
3. Keep donor declarations simple and accessible while ensuring you follow the model declaration wording provided by HMRC.
4. Train your volunteers to answer common questions.
5. Use digital tools to streamline record-keeping and claims. Consider if the cost of third-party tools is outweighed by the potential additional Gift Aid that could be claimed.

Yes, Gift Aid certainly has its challenges, but it remains a vital income stream for most charities, and I’d urge no organisation to be deterred in pursuing the full scope of their potential Gift Aid claim, the reward almost certainly will outweigh the admin if handled efficiently.