Patriotic gifts to UK government hit 10-year high

It has been reported that there is increasing consensus amongst the finance ministers of the G20 that more focus should be given to the tax affairs on the ‘global elite’. In a recent G20 Ministerial Declaration, it was stated that ‘aggressive tax avoidance or tax evasion of ultra-high-net-worth individuals can undermine the fairness of tax systems, which comes along with a reduced effectiveness of progressive taxation’. 

This follows pressure on the UK government from campaign groups such as Patriotic Millionaires UK who last year projected the phrase ‘tax our wealth’ on to the Treasury and Bank of England. However, there are other opportunities for taxpayers to contribute more to the government’s finances, in particular by making what is sometimes referred to as ‘patriotic gifts’.

Making patriotic gifts to the nation is a longstanding tradition and dates back to the time of the Napoleonic wars. Donations are still accepted in modern times and the UK Debt Management Office (DMO) is responsible for accepting donations or bequests from the public where they want to specifically contribute towards reducing the national debt.

Donations can be made by direct bank transfer or cash donations given specifically to reduce the national debt, whether made as a gift during lifetime or as a bequest in a will made on death. The amounts donated in recent years have been relatively modest, totalling a little over £47,000 in the year to 31 March 2023 and only around £2,100 the year before that.

However, the figures for the year to 31 March 2024 represent a 10-year high. The Annual Report and Accounts of the Commissioners of the Reduction of the National Debt shows that a total of six donations were made in the year ended 31 March 2024, with a cumulative value of £698,687. In comparison, six donations were made in the 2023 year, but only amounted to £47,249. The total received in the 2023/24 year is the most significant amount received under the scheme since 2013/14 when donations totalled £799,000.

The majority of the donations made in 2024 were made as a bequest in an individual’s will, which bucks the trend of previous years where the majority of gifts were made in lifetime. In fact, over 98% of the donations in 2024 were made as a legacy on death, with lifetime gifts in 2024 totalling a derisory £1,478.

In the context of the current level of national debt, the impact and scale of donations made under the scheme remains relatively negligible. What isn’t clear from the information provided by the DMO is who is making the donations. The quantum of the gifts would suggest that very few of the wealthiest in society are taking this route to voluntarily donate funds to aid the UK’s finances. Perhaps more needs to be done to promote this as an option to taxpayers or maybe there simply is not much appetite for individuals to make such donations. 

Certainly when compared with the increase in charitable donations in the same period, the differences are stark and the tax advantages of gift aid and the reduced inheritance tax rate may also be part of the reason why specific gifts to charity are being chosen over voluntary contributions to the Treasury. These ‘patriotic gifts’ are exempt from inheritance tax, but do not provide the same tax incentives as charitable donations or the ability to direct where the funds are used and are not as well known.

In order to address the differences, an overhaul of the system could be considered. It may seem slightly counterintuitive but perhaps some tax incentives should be introduced to encourage such donations. One option may be to potentially bring the tax treatment of voluntary contributions to the DMO in line with charitable donations, which may make it more appealing to potential donors.