Rise in charity tax reliefs highlights continued generosity of donors, despite economic headwinds
Andrie Kazamias, Tax Director at RSM UK, comments on HMRC’s latest charity tax relief statistics:
“The latest figures provide a much-needed boost for the charitable sector. It’s particularly positive to see an increase in tax relief claims for charities and their donors given the challenging economic backdrop, persistent cost-of-living pressures, and continued political and global uncertainty.
“The standout figure is the 10% increase in Gift Aid payments to charities, rising to £1.88bn. This suggests that, despite financial pressures on households, many donors remain committed to supporting the causes they care about and are making use of the tax reliefs available to maximise the value of their giving.
“While slightly fewer people declared donations on their Self Assessment returns, those who did appear to have given more generously, indicating that charitable giving remains a priority for many taxpayers.
“The increase in Inheritance Tax reliefs on charitable donations further demonstrates the important role philanthropy plays in tax and estate planning. As wealth transfers between generations increase, charities may continue to benefit from individuals seeking to leave a lasting legacy, while supporting causes that matter to them.
“Perhaps most significantly, nearly half of all Gift Aid payments went to charities receiving less than £1m each. This underlines the vital importance of Gift Aid not just for the largest organisations, but for thousands of small and medium-sized charities that rely heavily on voluntary donations to sustain their activities.
“While the slight fall in business rates relief reflects ongoing pressures facing some organisations, the overall picture is one of resilience. At a time when many charities are experiencing rising demand for their services and increasing operating costs, growth in charitable tax reliefs provides a valuable source of financial support and demonstrates the enduring generosity of UK donors.
“Looking ahead, maintaining confidence in Gift Aid and ensuring charities can continue to access reliefs efficiently will be critical if this positive momentum is to continue.”