First, using Gift Aid never really reduces your taxes: it merely allows the charity to reclaim some of the taxes you have already paid (the amount reclaimed assumes you are a basic-rate tax-payer). If you are actually a higher-rate tax-payer, you can also reclaim the remainder of the taxes you have already paid.
Example 1: Normal-rate tax-payer: Consider £100 of your gross wages, of which £20 is paid in taxes at 20%. If you donate the £80 you receive to a charity through gift-aid, the charity can reclaim the £20 of basic-rate tax that you have already paid.
Example 2: Higher-rate tax-payer: Consider £133.33 of your gross wages, of which £53.33 is paid in taxes at 40%. If you donate the £80 you receive to a charity through gift-aid, the charity can again reclaim £20 – the amount of tax a basic-rate tax-payer would have paid if left with £80 net. However, because you are actually a higher-rate tax-payer, you can also reclaim the remaining £33.33 of taxes that was already paid.
Note: in neither of these cases is it possible to "deduct the full donation amount from my UK taxes". All that happens is that the charity (and, possibly, you) can reclaim the tax that has already been paid1.
Second, can you reclaim any taxes if charitable donations are made not through gift-aid? I have not found a source that explicitly says that tax cannot be reclaimed on non-gift-aid donations, but all the sources I have found strongly imply that it is necessary to donate through gift-aid (with a couple of exceptions, see below):
Self-assessment and tax relief on charitable donations on the Wise Monkey blog includes:
Gift Aid allows charities to claim basic rate tax of 20% on your donation. But higher rate taxpayers pay 40% tax.
So, if you’re a higher rate taxpayer, you can claim, from HMRC, the difference between the basic rate of tax claimed by the charity on your donation and the higher rate of tax you actually pay.
The implication, at least by my reading, is that charities can only reclaim tax on gift-aid donations, and you can only reclaim the difference between what they claimed and what you paid. If you didn't use gift-aid, they wouldn't be able to reclaim the basic-rate tax and you wouldn't be able to reclaim anything.
Tax relief when you donate to a charity on the HMRC website states:
Donations by individuals to charity or to community amateur sports clubs (CASCs) are tax free. This is called tax relief.
The tax goes to you or the charity. How this works depends on whether you donate:
- through Gift Aid
- straight from your wages or pension through a Payroll Giving scheme
- land, property or shares
- in your will
This includes a generic "Donations by individuals to charity ... are tax free" but, again by my reading, since "direct contribution [outside gift-aid]" isn't listed, it won't be possible for them or you to reclaim any tax on such donations.
Charity donations: tax relief, again from HMRC states:
Donations to charity from individuals are tax free. You can get tax relief if you donate:
- through Gift Aid
- straight from your wages or pension, through Payroll Giving
The first part, "Donations to charity from individuals are tax free" also seems to suggest that any donations are tax free (without explicitly stating whether this includes non-gift-aid donations), but again the bullet-list does seem to imply that you must use gift-aid (or that you use Payroll Giving).
Possible ways of giving without using Gift-Aid
Both the HMRC lists above mention Payroll Giving as one way of donating. More information on this can be found on Donating straight from your wages or pension, but the main (potential) hurdle is that it requires your employer (or your pension provider) to operate a suitable scheme.
Another potential option comes from the third option of the first HMRC page above, where it talks of donating "land, property or shares". This opens the possibility of donating shares rather than hard cash. According to Donating land, property or shares, the full amount donated can be deducted from your taxable income (meaning you have a lower tax bill), but relies on the charity being willing to accept shares rather than money. However, the same page also includes:
When you offer a gift of land, property or shares, the charity may ask you to sell the gift on its behalf.
You can do this and still claim tax relief for the donation, but you must keep records of the gift and the charity’s request. Without them, you might have to pay Capital Gains Tax.
which implies you can give the cash-equivalent, but – presumably – you must be able to demonstrate that the value you give existed as land, property or shares at the time the offer to donate was made. You probably cannot just give some money and then later say "it came from some shares I used to own".
1 Generally, Gift-Aid involves reclaiming tax that has already been paid. However, the HMRC page on Gift Aid does state that under some conditions you can claim tax-relief on donations made in the current tax-year.
