Higher earners ramped up their donations to charities with higher rate tax relief up by 12% in the last year to £740m from £650m, the highest figure on record.

Charities were paid £1.6bn in Gift Aid on donations from basic rate taxpayers over 2022-23, up 19% from £1.34bn the previous year, while donations bequeathed in wills benefited from £790m in inheritance tax relief, although this was based on an estimated figure.

HMRC attributed the increase in basic rate Gift Aid to a hike in HMRC investigation activity in March 2022, when HMRC put a large number of claims on hold for extra risk assessment. HMRC confirmed that most affected claims were paid out in April and May 2023, distorting the annual totals.

For the tax year to April 2023, tax relief for charities and their donors was just under £6.0bn, up 8% year-on-year. This was made up of £4.3bn of reliefs for charities and £1.7bn in reliefs for donors, both up 8%.

Slightly more than half of the value of Gift Aid payments went to charities that received more than £1m each, a little more than previous years. The total number of organisations benefiting from Gift Aid fell by 2% in the year to April 2023, to just over 64,000.

More than 1.2m people declared a donation on their self assessment return for tax year ending April 2022, about 2% more than the previous year. They declared £4bn in donations of all types, which was 14% more than the previous year.

Donation amounts increase in line with income. Donors who earned a gross income of £250,000 or more donated an average £26,870 in tax year ending April 2022. Conversely, the average ratio of gross income donated broadly decreases as gross income increases.

The highest average percentage of gross income came from donors who had a gross income of £50,000 or below at 3.4%.

The age group that donates the highest average amount per donor is 55 to 64 year olds with a mean donation of £4,090.

Business rates relief

The total figure includes £2.4bn in business rates relief which means that charities and their high street shops only pay 20% of business rates, due to an 80% tax break, and in some instances, this is topped up to 100% by local authorities.

Charities and community amateur sports clubs have to claim Gift Aid at the basic rate, Gift Aid Small Donations Scheme, interest income, royalties and trust settlements directly from HMRC.