The reliefs, and who they're for
Registered charities (and CASCs) get a genuinely valuable bundle: Gift Aid on donations, the Small Donations Scheme, 80% mandatory business rates relief, broad exemption from corporation tax on charitable income, and specific VAT reliefs. The catch: most of them must be actively claimed or registered for — HMRC doesn't apply them automatically — and several have paperwork that small charities skip.
Important boundary: these are largely charity reliefs. A CIC is not a charity and can't claim Gift Aid or the business rates relief, and pays corporation tax — which is exactly why the structure choice matters (see our structure guide).
The full guide shows how to claim each without leaving money behind.
Gift Aid: the 25% you're owed
For every £1 a UK taxpayer donates, your charity can reclaim 25p from HMRC — because the donation is treated as made after basic-rate tax. A £100 donation becomes £125. To claim you need to:
- Be registered with HMRC for Gift Aid (separate from Charity Commission registration).
- Hold a valid Gift Aid declaration from each donor (confirming they're a UK taxpayer) — this is where claims fall down; no declaration, no claim.
- Keep records linking declarations to donations, and claim online (you can go back up to 4 years).
Higher-rate donors can also reclaim the difference personally — worth telling them, because it makes giving cheaper and encourages larger gifts.
The Gift Aid Small Donations Scheme (GASDS)
For the bucket collections and contactless taps where you can't get a declaration, GASDS lets you claim a Gift-Aid-style top-up on small cash and contactless donations (up to £30 each) — up to a capped total per year, broadly linked to your regular Gift Aid claims. It's designed exactly for the donations that fall through Gift Aid's cracks, and it's routinely unclaimed. We set it up.
Business rates: 80% off, often more
Charities get 80% mandatory relief on business rates for premises used for charitable purposes — and local authorities can grant up to the remaining 20% at discretion. On a shop, office or hall, that's frequently thousands of pounds a year. You must apply to your local authority; it isn't automatic.
Corporation tax: exempt, mostly
Charities are exempt from corporation tax on income applied to charitable purposes — donations, grants, investment income and primary-purpose trading. But non-primary-purpose trading (a charity running a café unrelated to its mission, say) can be taxable above small limits. The classic fix: run that trading through a trading subsidiary company that gift-aids its profits up to the parent charity, wiping out the tax. Set up right, it's clean and powerful; set up wrong, it's a mess — so get advice before you trade.
VAT: the awkward one
VAT is where charities' luck runs out. Charities generally can't reclaim VAT on most costs (they're often not making taxable supplies), so VAT is a real cost — but there are valuable reliefs: zero-rating on certain advertising, some equipment, and construction of certain charitable buildings; reduced rates on fuel and power for charitable use. It's fiddly and worth specialist eyes — missed zero-rating is money lost, wrongly-charged VAT is money you could reclaim from suppliers.
The quick audit Most small charities we meet are missing at least one of: GASDS, the discretionary 20% rates top-up, higher-rate donor prompts, or zero-rated advertising VAT. Individually small; together, often four figures a year straight back to the mission. It's the first thing we check.
Don't leave it on the table
Our Established and Impact packages include Gift Aid registration and claims as standard, and we review every relief you're entitled to as part of onboarding. If you're a charity not claiming the full bundle, that's money the cause is missing — let's fix it.
