Capping the rate at which tax relief is given on charitable donations under Gift Aid might raise £740 million in tax a year

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I have now published the seventh recommendation in the series that will make up the Taxing Wealth Report 2024.

As the title makes clear, this recommendation replicates a proposal made by George Osborne in 2013 to cap the rate of income tax relief on donations to charity, limiting it to the basic rate of income tax.

As the summary of the note that supports this recommendation says:

Brief summary

This note suggests that:

  • The higher rate of tax relief on donations made to charity by those who pay higher rates of income tax in the UK should be abolished.
  • The existing relief is inequitable: it is inappropriate that those who pay higher rates of tax should be provided with a higher rate of tax relief when the action giving rise to that relief are the same whether a person is a basic or higher rate taxpayer.
  • It is inappropriate that the higher rate of tax relief provided to the higher rate taxpayer as a result of their donation to charity benefits them and not the charity they donated to.
  • This relief might distort the behaviour of charities within society.
  • Removing this relief might save £740 million a year, increasing tax revenues by that amount as a result.
  • Evidence collected by HMRC suggests that this relief has relatively little impact on the behaviour of higher rate taxpayers, who appear no more likely to use it than basic rate taxpayers, and that the behavioural consequence of the removal of this relief might be limited as a result.


In 2013, an outcry from charities mainly supported by the wealthy and their wealthy donors forced George Osborne to back down on this issue, but subsequent research suggests that Gift Aid might not be nearly as significant to the wealthy as was thought, whilst the way in which this relief works remains an affront to all forms of tax justice. The time for the unequal and inequitable treatment that it provides to end should have arrived.

Cumulative value of recommendations made

The seven recommendations now made as part of the Taxing Wealth Report 2024 would, taking this latest proposal into account, raise total additional tax revenues of approximately £68.6 billion per annum.

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