Gift Aid is a UK tax incentive that enables tax-effective giving by individuals to charities in the United Kingdom. Gift Aid was introduced in the Finance Act 1990 for donations given after 1 October 1990, but was originally limited to cash gifts of £600 or more. This threshold was successively reduced in April 2000 when the policy was substantially revised and the minimum donation limit removed entirely. A similar policy applies to charitable donations by companies that are subject to the UK corporation tax.

Gift Aid was originally intended for cash donations only. However, since 2006, HMRC compliant systems have been introduced to allow tax on the income earned by charity shops, acting as an agent for a donor, to be reclaimed. In order for the charity to operate effectively they will need HMRC-approved systems to be able to record and track the progress of each item from receipt to sale and confirm with the donor that the donation should still go ahead. In the financial year 2021/22, Gift Aid to charities amounted to £1.3bn, a fall of 3% from the previous year largely attributed to HMRC putting on hold more claims than usual in March 2022 for extra risk assessment.

The Finance Act 2010 extended Gift Aid to charities within European Economic Area member states, rather than those just inside the UK. This provision was repealed by the Finance (No. 2) 2023 Act, again limiting Gift Aid to UK charities from April 2024.

Gift Aid allows individuals who are subject to UK income tax to complete a simple, short declaration that they are a UK taxpayer. Any cash donations that the taxpayer makes to the charity after making a declaration are treated as being made after deduction of income tax at the basic rate (20% in 2011), and the charity can reclaim the basic rate income tax paid on the gift from HMRC. For a basic-rate taxpayer, this adds 25% to the value of any gift made under Gift Aid. Higher-rate taxpayers can claim income tax relief, above and beyond the amount claimed directly by the charities. The rate of the relief for higher-rate taxpayers in 2011 is usually 20%, the difference between the basic rate (20%) and the higher rate (40%) of income tax, although recipients of dividend income (taxed at 10% and 32.5%) can achieve a higher rate of tax relief (22.5%).

Originally, declarations had to be made in writing. Declarations can now be made orally, but the charity must confirm the declaration in writing and keep a copy of the confirmation. If the taxpayer incorrectly makes a declaration, the charity is still able to reclaim the tax that should have been paid on the gift.

Gift Aid can only be reclaimed on money donated by UK taxpayers. Non-UK taxpayers can make donations. However, as HMRC is making payment to the charity but there has been no source tax paid by the donor, HMRC has power to collect the equivalent sum from the donor.

The first charity to introduce Gift Aid on donated goods – where the tax is reclaimed on the value of the goods when sold – was Sue Ryder Care, using Eproductive Ltd's EPR Gift Aid system.

Gift Aid is only for donations by the donor. It cannot be claimed on other people's donations – for example, if someone collects money from several people, each person would have to make a Gift Aid declaration for their portion. It also cannot be claimed for money where the donor received something in return, e.g. purchasing goods from a charity store, or buying a ticket in a charity raffle, as these are not strictly donations. In the case of donated goods, Gift Aid can still be claimed via the donor of the goods, not the purchaser.