Charity tax reliefs: A growing opportunity for strategic impact

The latest HMRC statistics show that tax reliefs for UK charities and their donors reached £6.7 billion in the tax year to April 2025 — a 5% increase year-on-year.

This continued growth highlights the critical role tax incentives play in sustaining the sector and presents a timely opportunity for charities to reassess how they engage with donors and structure their giving strategies. 

Key highlights from the 2025 statistics

• Gift Aid remains the cornerstone of donor tax relief, with £1.7 billion paid to charities — up 7% from the previous year.
• Business rates relief (non-domestic rates) accounted for £2.75 billion, also up 7%.
• Inheritance Tax (IHT) reliefs for charitable donations rose to £980 million, a 2% increase.
• Higher Rate Relief on Gift Aided donations reached £820 million, up 8%.

These figures reflect not only donor generosity but also the increasing sophistication of tax-efficient giving mechanisms. 

With nearly half of Gift Aid payments going to charities with income less than £1 million, there is clear potential for smaller organisations to benefit more. Strengthening Gift Aid claims processes and educating donors can unlock significant additional income.

The rise in Higher Rate Relief suggests that wealthier donors are increasingly aware of the tax benefits of giving. Charities should consider how they communicate these advantages, particularly in legacy and major donor fundraising.

As IHT reliefs continue to grow, charities should ensure they are part of estate planning conversations. Legacy giving remains a powerful — and tax-efficient — way to support charitable causes.

While the figures are encouraging, they also highlight the need for vigilance. Any future policy changes could impact these reliefs. Charities should stay informed and advocate for the continuation and expansion of these incentives. 

You can read the full summary here. 

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