Official Statistics

Quality report: Charity tax reliefs

Published 3 March 2023

1. Contact

Organisation unit: Knowledge, Analysis and Intelligence, HM Revenue and Customs

Statistics enquiries: [email protected]

Press enquiries: [email protected] (office hours); +44 7860 359 544 (24 hours)

2. Statistical Presentation

2.1 Data description

This publication provides information about reliefs for charities and their donors, for which a robust annual estimate is available.

It includes Gift Aid at both the basic rate of Income Tax and at higher rates as well as reliefs for Inheritance Tax, Stamp Duty Land Tax, business rates (sometimes known as non-domestic rates) and reliefs covering gifts by individuals and trusts of shares, property, interest income, royalties and trust settlements.

Tables 1 and 2, 3, 4 and 8 are National Statistics, whereas tables 5, 6 and 7 are Official Statistics. More information about National and Official Statistics can be found on the Office for Statistics Regulation Website.

2.2 Classification system

Some of the tables in these statistics group data into classes.

The following classifications are currently used:

For Table 4 (Gift Aid paid to organisations), the population of charities and community amateur sports clubs is categorised according to the total annual amount of Gift Aid paid to each organisation.

For Table 6 (donations declared by individuals), the population of individuals completing tax Self Assessment is categorised by demographic indicators from their Self Assessment returns. A taxpayer’s age is calculated from the last day of the tax year of their donation. For example, if you make a donation on 1 March 2020 then this table categorises you by your age on 5 April 2020.

For Table 7 (donations by geographic area), the population of individuals completing tax Self Assessment is categorised according to their UK postcode. Table 7.1 is categorised by UK Nation and region of England, which corresponds with Nomenclature of Territorial Units for Statistics (NUTS) Level 1, formerly known as Government Office Region. Table 7.2 is categorised by the constituencies of the Parliament of the United Kingdom.

2.3 Sector coverage

This publication covers tax reliefs for charities (including community amateur sports clubs) and their donors, where a robust annual estimate is available.

Reliefs which have not been widely available since before 2012 no longer appear in the data. These include:

• Corporate Gift Aid
• Covenants

Information on both current and older reliefs before 2012 is still available at the National Archives. To find archived statistics here, choose a date just after the date of publication. So, if you are looking for statistics as they were published in June 2019, select “1 July 2019”

There is no annual estimate currently available for most reliefs from corporation tax, VAT or for other Income Tax reliefs. Work is under way to expand the number of reliefs for which an estimate is available.

2.4 Statistical concepts and definitions

Gift Aid

Charities may claim Gift Aid and related reliefs on donations by individuals and trusts who pay Income Tax. Charities can claim back the Income tax already paid at the basic rate on the donated amount. Gift Aid is operated in line with the guidance for charities and taxpayers.

Higher rates of tax on Gift Aid

Gift Aid donors who pay above the basic rate of Income Tax, either in Capital Gains Tax or in Income Tax, may claim the difference between the basic rate of Income Tax and the highest rate they pay. The majority of this relief is claimed through HMRC’s Self Assessment tax system.

Gifts of shares and property

People who pay Income Tax or Capital Gains Tax may also offset their income against the value of shares, securities, land or property they donate to charity. The majority of this relief is claimed through HMRC’s Self Assessment tax system.

2.5 Statistical unit

Money values (except where indicated otherwise) are displayed in millions of pounds sterling [GBP], grouped by tax year, according to the available data.

Relief of	Grouping by tax year	Reason for grouping	Tables
Business rates (non-domestic rates)	Cost in that tax year	Consistency with National non-domestic rates collected by councils	1, 2
Gift Aid	Cost in that tax year	Charities may aggregate some donations across multiple dates for reporting purposes and thus are not required to tell HMRC the date of every individual donation	1, 2, 3, 4
Gift Aid Small Donations Scheme	Cost in that tax year	Charities may aggregate some donations across multiple dates for reporting purposes and thus are not required to tell HMRC the date of every individual donation	1, 2
Gifts of shares, property and higher rates of tax on Gift Aid	Tax year when donation was made	Taxpayers claim this relief by the year in which they made the donation, not the year they received the relief.	1, 2, 5, 6, 7
Inheritance Tax	Cost in that tax year	Consistency with Non-structural tax reliefs	1, 2
Payroll Giving	Tax year when donation was made	This is the format Payroll Giving agencies report their activities to HMRC.	1, 2, 8
Relief on donations of interest, royalties and donations by trusts	Cost in that tax year	For consistency with Gift Aid	1, 2
Stamp Duty Land Tax	Cost in that tax year	Consistency with Non-structural tax reliefs	1, 2

The unit for non-money values are as follows:

• in Table 4b (Number of organisations receiving Gift Aid) the units are the number of organisations
• in Tables 5, 6 and 7, the number of Self Assessment individuals is in thousands of people
• in Table 8, the number of Payroll Giving donors is in thousands of individual taxpayers

2.6 Statistical population

Not every UK donation is included in our data. However, all donations for which relief has been claimed by charities or taxpayers and captured in analytical databases underpinning the publication are included.

Not all individuals’ donations benefit from Gift Aid. According to Charitable Giving and Gift Aid Research, Gift Aid is paid on just over half by value of all individuals’ donations. The report has more information about why donations do or do not benefit from Gift Aid.

Corporate donations are not currently included in these statistics.

Tables 1 and 2 also contain some additional populations.

For Non-domestic rates (business rates) relief, all charities and sports clubs in England, Scotland and Wales benefitting from both mandatory and discretionary reliefs are included in the population.

For Stamp Duty Land Tax, all charities submitting returns and benefiting from relief are included.

For Inheritance Tax, the population also contains all estates for which HMRC receives a return and for which HMRC grants relief for charitable donations.

For Gift Aid at higher rates, and for gifts of shares and property, all Self Assessment taxpayers declaring a donation of any of these types are included in the tables.

2.7 Reference area

Gift Aid and related reliefs are generally limited to individuals and trusts paying UK Income Tax or UK Capital Gains Tax. There is no requirement for the donor or the charity to be based in the UK, but in practice nearly all donors and charities in these statistics have a UK base.

For non-domestic rates (business rates), coverage is currently for England, Wales and Scotland only. Non-domestic rates reliefs data is not readily available for Northern Ireland.

For Stamp Duty Land Tax, coverage is currently for England and Northern Ireland only. Land taxes in other UK nations are devolved.

Reliefs on the other taxes generally have similar geographic coverage to the taxes they are part of.

3. Statistical processing

3.1 Source data

Gift Aid and related reliefs

Charities collect data on their Gift Aid donations, and report this to HMRC as part of their claim process. Relief on Gift Aided donations at higher rates of tax is claimed directly with HMRC by the donors themselves.

Gift Aid at higher rates of tax and reliefs for gifts of shares and property

The majority of these donations by value are reported to HMRC through tax Self Assessment. The relief due on these is estimated from the amounts of income of each taxpayer and the relevant thresholds and tax rates.

A very small proportion of these donations are reported directly to HMRC, for example through PAYE. Processing these donations for statistics purposes is not practicable, so if such a taxpayer does not go on to submit a Self Assessment return, then their donation will not appear in the statistics.

Payroll Giving

Agencies operate the Payroll Giving scheme, collecting data from employers. They submit summary data to HMRC.

Other reliefs

Business rates, stamp duties relief for charities and Inheritance Tax relief on charitable donations are published separately, but are summarised in table 1 and 2. Relevant details are included in the notes section for table 1 and 2 but information about processing for these reliefs may be found in their respective publications.

3.2 Frequency of data collection

Charities may submit several claims per year for Gift Aid and associated reliefs

Most Self Assessment taxpayers submit data to HMRC every year, in an annual return due the first January after the end of the tax year.

Non-domestic rates (business rates), Stamp Duty Land Tax and Payroll Giving reliefs data is generally available only once a year.

3.3 Data validation

Checks carried out on the data include:

• comparisons to the previous statistics release
• year-on-year comparisons
• check for consistency within tables (other than rounding errors)
• comparisons within and between tables where related data is available
• for non-domestic rates (business rates), the above checks by UK nation as well as in aggregate
• for Gift Aid and Payroll Giving, checks with policy and operational experts in HMRC,
• checks with experts in statistics for individual taxes in HMRC
• for Self Assessment reliefs, checks to ensure no income has been allocated to more than one tax rate
• for Payroll Giving, checks on individual agencies’ returns

3.4 Data compilation

Imputation and grossing for missing data

Most Gift Aid data is up to date and does not require imputation or grossing up.

For business rates, Stamp Duty Land Tax and Inheritance Tax, we use the most recently published forecasts, usually for the most recent tax year at the time of publication.

For Gift Aid at higher rates of tax, we estimate the level of relief individually for each Self Assessment taxpayer, based on the value of their donations and the amount of their income that falls into each tax band.

Also for these reliefs, Self Assessment taxpayers’ returns are not due with HMRC until the January after the end of the tax year. This means that, for the most recent complete tax year most recently complete, there is not usually sufficient data to publish information about taxpayers who donate. Therefore, in Tables 5 to 7, we present detailed data for the year before the most recently complete tax year. Tables 1 and 2 however include summary data for the most recently completed tax year, so we forecast for this tax year. For Gift Aid at higher rates, our forecast projects growth in donations for the latest year per growth in Gift Aid.

Payroll Giving agencies send HMRC annual returns too late for publication, so the level of relief for the tax year is forecast, based on (a) previous years’ reliefs and (b) expert advice on the impact of coronavirus and furlough on Payroll Giving.

4. Quality Management

4.1 Quality assurance

Official statistics meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority. Analysts use best practice as set out in the ‘Quality’ pillar.

Analysts use a checklist that summarises the key QA tasks. This is used as a starting point for teams when they are considering what further QA actions to undertake. Teams amend and adapt it to take account of the level of risk associated with their analysis, and the different QA tasks that are relevant to the work.

Analysts carry out the QA tasks, update the checklist, and pass onto a senior officer for review and eventual sign off.

4.2 Quality assessment

The QA for this project adheres to the framework described above. The specific procedures undertaken are described in the sections below.

Stage 1 – Specifying the question

Up to date documentation was agreed with stakeholders setting out outputs needed and by when; how the outputs will be used; and all the parameters required for the analysis.

Stage 2 – Developing the methodology

Methodology was agreed and developed in collaboration with stakeholders and others with relevant expertise, ensuring it was fit for purpose and would deliver the required outputs.

Stage 3 – Building and populating a model/piece of code

Analysis was produced using the most appropriate software and in line with good practice guidance. Data inputs were checked to ensure they were fit-for-purpose by reviewing available documentation and, where possible, through direct contact with data suppliers. QA of the input data was carried out. The analysis was audited by someone other than the lead analyst, who checked the code and methodology

Stage 4 – Running and testing the model/code

Results were compared with those produced in previous years and differences understood and determined to be genuine. Results were compared with comparable independent estimates, and differences understood. For example, total CT receipts figures were checked for consistency with the latest HMRC financial outturn position. Results were determined to be explainable and in line with expectations.

Stage 5 – Drafting the final output

Checks were completed to ensure internal consistency (eg totals equal the sum of the components). The final outputs were independently proof-read and checked.

5. Relevance

5.1 User needs

This analysis is likely to be of interest to users under the following broad headings:

• national government – policy makers and MPs
• regional and local governments
• charities, and bodies representing charities
• academia and research bodies
• media, especially specialist charity media
• general public

5.2 User satisfaction

HMRC solicits feedback from statistics users, in the commentary, via direct correspondence with users who offer comments and suggestions, and via user consultations every 2 years, for example Responses to publication-specific feedback. Users are broadly supportive of the content and scope of the statistics and to changes proposed for future editions.

5.3 Completeness

Some aspects of the data represent a partial view of charities and their donations in some respects, for example:

• donations by companies are generally not included
• donations of money by living individuals are generally only included if they go through Gift Aid (about half of individuals’ cash donations)
• donations left by individuals in their wills are only included if their estate is liable to send an Inheritance Tax return to HMRC
• purchases of land and property by charities are only included if HMRC receives a SDLT return

6. Accuracy and reliability

6.1 Overall accuracy

This analysis is based primarily on administrative data. Accuracy is addressed by eliminating non-sampling errors as much as reasonably practical through the quality assurance process.

Potential sources of error include:

• database, system and process errors by HMRC and its agents
• mistakes in the programming code used to analyse the data and produce the statistics
• transcription and summarisation errors
• errors and fraud by charities or organisations claiming to be charities
• errors and fraud by donors, or entities claiming to be donors

6.2 Sampling error

These statistics do not use sampled data.

6.3 Non-sampling error

6.3.1 Measurement error

The main sources of measurement error could be categorised as respondent errors.

Self Assessment donors might declare a cash donation that did not go through the Gift Aid system, or they might not enter a donation that did.

Self Assessment individuals might declare the wrong value for a donation, or declare a donation that did not happen at all.

Individual donors might declare to charities that they qualify for Gift Aid when they do not. If the individual later declares the donation to HMRC, then the value of this incorrect claim is usually rectified via the donor’s tax account.

Charities might declare donations which are not valid for Gift Aid, or declare the wrong value, or declare donations that did not happen, or fail to claim Gift Aid for a donation to which the donor intended to add Gift Aid.

Payroll Giving data is mostly compiled by agencies who operate this scheme on behalf of HMRC. We have a broad understanding of the statistical methods and definitions used by agencies representing most of the value of Payroll Giving to charities and donors and we track and verify their inputs to these statistics, but it’s possible that errors and changes in definition may occur undetected.

Relief of Gift Aided donations at higher rates of tax is estimated. It does not currently include declarations made by non-Self Assessment taxpayers (for example, those who contact HMRC to claim the relief). Data exploration suggests that this missing population is a small proportion of the total value of this relief. Other, smaller simplifications in the estimate, if fully and accurately modelled, would be expected in combination to decrease the estimate by a broadly similar amount. If the systems of either Income Tax or Gift Aid changes significantly, these effects could go out of balance. If this happens, there may be a case to revisit this estimate.

6.3.2 Nonresponse error

Individual taxpayers who file more than a few months later than the January Self Assessment deadline will be missing from the statistics for Tables 6 and 7. They will also be missing from Table 5, but since Table 5 is updated annually by tax year, taxpayers who have submitted a return since the previous publication will appear later. This typically affects fewer than 2% of donations in this table.

6.3.3 Processing error

It is possible that errors exist in the programming code used to analyse the data and produce the statistics. This risk is reduced through developing a good understanding of the complexities of reliefs for charities and their donors, and thoroughly reviewing and testing the programs that are used.

6.4 Data revision

6.4.1 Data revision – policy

The United Kingdom Statistics Authority (UKSA) Code of Practice for Official Statistics requires all producers of Official Statistics to publish transparent guidance on the policy for revisions.

6.4.2 Data revision – practice

This analysis is published annually and includes an estimate of reliefs. for the latest financial year, in most cases along with revisions for the previous 4 years.

Some reliefs, such as Inheritance Tax relief for donations, can vary substantially from year to year and / or take some years for administrative data to be finalised in sufficient cases for our statistics to become stable.

A small proportion of taxpayers send their Self Assessment returns more than a few months late. Returns can also be amended or corrected after they first contribute to these statistics. This typically affects the statistics by less than 2%.

Gift Aid payments data is very stable and rarely changes after the payment date. There are a small number of cases where it is later discovered that HMRC has overpaid a charity. This effect is not recorded in these statistics.

6.5 Seasonal adjustment

Seasonal adjustment is not applicable for this analysis.

7. Punctuality

In accordance with the Code of Practice for official statistics, the exact date of publication is announced on the Research and statistics calendar of GOV.UK. Any delays to previously-announced publication dates will also be announced on the HMRC National Statistics website.

8. Coherence and comparability

8.1 Geographical comparability

These tables do not categorise charities by geography. Especially for larger charities, their address for their Gift Aid or tax affairs may not be local to the place where most of their charitable work takes place, so such categorisation may have limited value.

8.2 Comparability over time

Most time series are broadly comparable over time except Stamp Duty Land Tax, which was devolved to UK nations as described in the table notes. For Payroll Giving, agency changes to the definition of a “participating employee” in tax year ending 2020 made a significant difference to this measure for Payroll Giving overall. We indicate this by splitting the series between 2 columns.

8.3 Coherence – cross domain

Some comparisons to external statistics may be possible, but in particular:

• Tables 3 and 4 contain only those donations on which charities claim Gift Aid. Charities are not required to offer Gift Aid to their donors, and qualifying donors are not required to participate
• Tables 5 to 7 contain only those donations declared via Self Assessment. Most taxpayers do not use Self Assessment, and those that do may not declare some or all of their qualifying donations

8.3.1 Coherence – sub-annual and annual statistics

All statistics are either for a single specified year or an annual time series as indicated.

8.3.2 Coherence – National Accounts

Gift Aid statistics are shown by the year in which the relief was paid, which is the same the National Accounts basis. For other reliefs, you may wish to refer to the main statistics publication for each tax.

8.4 Coherence – internal

Rounding of numbers may cause some minor internal coherence issues as the figures within a table may not sum to the total displayed.

9. Accessibility and clarity

9.1 Publication

The tables and associated commentary are published on gov.uk.

Tables are published in the OpenDocument and PDF formats to suit users whether or not they have a spreadsheet app on their device. The associated commentary is published in markdown HTML.

Collectively, the documents comply with the accessibility regulations set out in the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018.

Further information can be found in HMRC’s accessible documents policy.

9.2 Other

Alternative formats may be available on request. Users may contact [email protected].

Some micro-level data may be accessible by arrangement, for example via HMRC’s Datalab.

10. Cost and burden

It takes about 35 working days to produce the annual analysis and publication. Extra time is often required to resolve unexpected issues, consult with users, improve the statistics and the production process, and train new statisticians and other analysts in their production, and to produce supporting information such as this document.

11. Confidentiality

11.1 Confidentiality – policy

HMRC has a legal duty to maintain the confidentiality of taxpayer information, which includes individuals and organisations of these reliefs as well as those who pay tax.

Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (CRCA) sets out our duty of confidentiality.

11.2 Confidentiality – data treatment

Statistical disclosure control is used to reduce the risk that confidential data is disclosed to parties who don’t have authority to access it, while making the data as useful as possible, especially where one or more cells in a table has any of:

• a small numbers of contributors
• contributors that are very dominant
• there is risk of disclosure due to differences to data in a nearby cell

This generally only happens in Table 6, where a small number of constituencies in the UK typically have some data withheld to protect the identity of individual donors.

Further information can be found on the anonymisation and data confidentiality page.