HMRC publishes charity tax relief statistics

HMRC has announced that the total value of the reported tax reliefs on charitable donations remained broadly steady with both the first year of the pandemic ending April 2021, and the year immediately before the pandemic, ending April 2019.

For the tax year ending April 2022, tax reliefs for charities and their donors were £5.4 billion, less than 1% different to the previous year. For Gift Aid, paid at the basic rate of Income Tax, direct to charities, the amount paid was down 3% at £1.3 billion. This reduction was caused by HMRC putting on hold more claims than usual in March 2022 for extra risk assessment. HMRC paid most of the affected claims in April and May 2022, and these will appear in next year’s statistics. The amounts claimed by charities in that period are not affected: they have risen slightly year-on-year.

The remaining largest tax reliefs in tax year ending April 2022 were all similar to the previous two years:

  • non-domestic rates (business rates) reliefs, down less than 1% to just under £2.4 billion
  • relief for higher rates of tax on Gift Aid donations, paid to individuals, is forecast to be steady at £0.5 billion
  • Inheritance Tax reliefs for donations, down 4% at £0.8 billion
  • smaller reliefs (where an estimate is available) were worth around £0.4 billion
  • Just over half of the value of Gift Aid repayments went to charities that received less than £1 million each, in line with previous years

The proportion of individuals declaring a donation via Self Assessment is steady at 11% in the first year of the pandemic, ending April 2021, although the number of donors has dropped 4%, in line with a similar fall in the number of people submitting Self Assessment returns. Total donations declared by Self Assessment individuals for that tax year also fell, standing at £3.4 billion the same tax year.

CTG Chair, Richard Bray commented: “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.

“CTG continues to work closely with HMRC to ensure that Gift Aid claims are made correctly and efficiently. Communication with the sector is important where delays in paying claims arise as Gift Aid is very important for many charities’ cashflow.”