What is Gift Aid?
Gift Aid is a UK tax scheme that allows charities to claim an extra 25 percent on donations made by UK taxpayers. When it comes to charity shops, Gift Aid lets charities earn more money from the sale of donated items once the donor gives permission for the charity to treat the proceeds as a Gift Aid donation.
This means that if you donate an item to a charity shop and it sells for £4, the charity can claim an extra £1 from HMRC at no cost to you. Gift Aid increases the value of donations and helps charities raise more from every pre-loved item sold.
Gift Aid Meaning
Gift Aid is a UK scheme where charities can claim an extra 25 percent from the government on donations made by eligible UK taxpayers, including the sale of donated goods in charity shops.
It boosts the value of your donations without costing you anything.
How Gift Aid Works in Charity Shops
The process is simple and looks like this:
You donate items: Clothes, books, homeware, furniture and other goods.
You sign a Gift Aid form: This confirms you are a UK taxpayer and gives the charity permission to claim on your behalf.
The charity sells your items: When the items are sold, the charity records the amount earned.
The charity claims an extra 25 percent: HMRC gives the charity a top-up based on the selling price.
For example: If your donated jumper sells for £8, the charity can claim an extra £2 at no cost to you.
Why Gift Aid Matters
Gift Aid provides millions of pounds of extra income to charities each year.
Increases the value of every donation: Charities can earn 25 percent more from your donated goods.
No extra cost to donors: It boosts your contribution without you paying more.
Supports community work: The added income helps fund research, support services and local programmes.
Encourages sustainable giving: More value is generated from items already in circulation.
Gift Aid makes donating pre-loved goods even more impactful.
Who Can Use Gift Aid?
Gift Aid applies if you:
live in the UK
pay Income Tax or Capital Gains Tax
have paid enough tax to cover the amount the charity will claim
are donating goods or money to a registered charity
You only need to sign up once per charity, and you can cancel your declaration at any time.
Gift Aid for Donated Goods vs Gift Aid on Cash Donations
Gift Aid works slightly differently depending on what you donate.
Gift Aid on donated goods
The charity sells your item, tells you how much it made and then claims Gift Aid on that value.
Gift Aid on cash donations
The charity claims 25 percent on the amount you give.
Both methods boost the value of your contribution.
Why Charity Shops Ask for Gift Aid
If you have ever donated to a charity shop, you will know that they almost always ask, "Would you like to Gift Aid your donation?"
This is because:
Gift Aid increases revenue
It helps charities fund more projects
It turns second-hand goods into higher-value donations
It costs nothing to donors
It is simple to manage with a donor number or barcode
Gift Aid is one of the best ways for charity shops to maximise funding.
Gift Aid and Sustainable Fashion
Gift Aid plays an important role in the circular economy by encouraging people to:
donate items they no longer need
support local charity shops
keep clothing and homeware in circulation
reduce waste by preventing items going to landfill
Every donated item generates even more value when Gift Aid is used.
Related Terms
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