Charity tax reliefs double in six years

Well-off taxpayers are claiming record levels of relief on their charitable gifts, reducing their tax liabilities by £1.2bn last year.

The cost to the exchequer of individuals' donations has almost doubled since the financial crisis, with reliefs for individuals rising year-on-year since 2008-09, according to figures published by HM Revenue & Customs.

Growth in higher rate relief on Gift Aid donations accounted for half of the estimated £100m total increase in reliefs in 2014-15.

The tax break, which cost £470m last year, allows higher earners to claim the difference between their marginal income tax rate and the basic (20 per cent) rate on their giving.

A Gift Aid donation of £100, worth £125 to the charity, would deliver a tax rebate of £25 to donors who pay income tax at 40 per cent, for example. Additional rate (45 per cent) donors could claim relief of £31.25.

HMRC attributes the trebling in higher rate relief claims over the past decade to the growth in higher rate taxpayers and the introduction of the "additional" income tax band in 2010.

The majority of charitable tax relief by value continues to relate to gifts made on death, however. In 2014-15, £630m was claimed in inheritance tax relief.

Where at least 10 per cent of an estate by value - after debts and reliefs, and minus the nil-rate band of £325,000 - is given away to charities, museums, universities and the like, a lower IHT rate of 36 per cent (down from 40 per cent) is applied to the remaining assets.

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