Charitable Giving When You Pay Tax in Both the US and UK: Why One Gift Can Earn Relief in Only One Country

If you pay tax in both the United States and the United Kingdom, where a gift goes can matter as much as how big it is. UK Gift Aid and UK income tax relief are generally limited to UK charities, and a US income tax deduction is generally limited to US qualified organisations — so a donation to a UK-only charity can earn relief in Britain and nothing on your American return, and the reverse is equally true. The families who give well across both systems usually do it through organisations that qualify on both sides, after checking that status for themselves.

Key takeaways

• Each country relieves gifts to its own charities. HMRC restricts charitable reliefs to charities within the jurisdiction of the UK courts; the IRS states that contributions to foreign organisations are generally not deductible.
• The US-UK income tax treaty does not fix this. We found no provision in the treaty text allowing a deduction for gifts to a charity in the other country, and the IRS names only certain Canadian, Israeli and Mexican charities as treaty exceptions.
• Organisations that qualify in both countries — dual-qualified charities, US "friends of" organisations and cross-border donor-advised arrangements — are the practical answer, but status must be confirmed for each organisation.
• Gifts of listed shares can be more efficient than cash in both systems, though the rules differ in detail.
• Legacies behave differently from lifetime gifts: UK inheritance tax and US estate tax each give charitable bequests favourable treatment, on different conditions.

Why one gift can be relieved twice, once, or not at all

Tax relief for giving is a subsidy from a government to causes it recognises. Both governments define that recognition by reference to their own regulators, which is why the same cheque is treated so differently.

The UK side. Gift Aid lets a charity claim an extra 25p for every £1 you give, provided you make a Gift Aid declaration and the organisation has an HMRC charity reference number. Since April 2024, HMRC has restricted charitable tax reliefs to UK charities: a charity must come within the jurisdiction of the High Court in England, Wales or Northern Ireland, or the Court of Session in Scotland. The measure removed eligibility from the EU and EEA charities that previously qualified, and it extends beyond income tax to capital gains tax and inheritance tax.

The US side. The IRS explains that individuals who itemise may deduct contributions to qualified organisations, and states plainly that, apart from limited exceptions, contributions to a foreign organisation are not deductible. Publication 526 lists those exceptions as certain Canadian, Israeli and Mexican charitable organisations covered by treaties. A UK charity, however distinguished, is not on that list.

The result for a dual taxpayer:

• UK-registered charity only: potential UK relief; generally no US income tax deduction.
• US 501(c)(3) only: potential US deduction; generally no Gift Aid and no UK income tax relief.
• An organisation recognised in both systems: potential relief in both, subject to each country's own conditions.

What the US-UK tax treaty does — and does not — say

It is natural to assume the treaty between two such close partners addresses this. Having read the 2001 US-UK income tax treaty, we found no article allowing a resident of one country to deduct gifts to a charity established in the other. Where the treaty mentions charities, it deals with the organisations themselves — for example, treating a body established exclusively for religious, charitable, scientific, artistic, cultural or educational purposes as a resident of its home state for treaty purposes.

That contrasts with the treaties the IRS itself cites in Publication 526 for Canada, Israel and Mexico, which do contain charitable contribution provisions. The honest conclusion is that the treaty is not a route to cross-border relief for individual donors. If an adviser suggests otherwise, ask them to identify the article.

A related point for Americans living in Britain: many already have UK tax available as a foreign tax credit against their US liability. Where that credit already eliminates the US tax on UK income, an additional US itemised deduction may add little in practice, and the UK relief is often the one that moves the needle. Where US-source income is significant, the picture changes. The modelling belongs in the plan, not in hindsight.

The solution families use: organisations that qualify in both countries

Because neither system will relieve a gift to the other's charities, cross-border philanthropy is usually channelled through bodies built to satisfy both regulators. Three broad patterns exist.

• Dual-qualified charities. Some organisations — often universities, cultural institutions and international causes — maintain recognition both as a US tax-exempt charity and as a UK charity with an HMRC reference. A gift to the right entity can then be relieved under each country's rules.
• US "friends of" organisations. A separately incorporated US charity supports a UK cause. The IRS is clear that you cannot deduct a contribution earmarked to go to a foreign organisation; the US charity must approve the programme as furthering its own exempt purposes and keep control over the funds. Structure, not labels, decides deductibility.
• Cross-border donor-advised arrangements. Some donor-advised fund sponsors operate linked entities in both countries, allowing a donor to give in the country where relief is most useful and to recommend grants afterwards, subject to the sponsor's own due diligence.

We do not recommend any particular charity, fund or provider. What we do insist on is verification:

• Check US status on the IRS Tax Exempt Organization Search.
• Confirm the UK entity has an HMRC charity reference and check the relevant charity register, as GOV.UK suggests when leaving gifts in a will.
• Confirm exactly which entity your payment goes to. The US and UK arms of a cause are frequently separate legal persons with separate receipts.

Gift Aid for dual taxpayers: the tax-paid test

Gift Aid is not free money in every case. GOV.UK states that donations qualify only where they are not more than 4 times what you have paid in tax — income tax and capital gains tax — in that UK tax year, and that HMRC may ask you to pay more if a charity received more relief than you paid. An American who has moved back to the US and no longer pays meaningful UK tax should stop making Gift Aid declarations rather than let them run on.

Higher and additional rate taxpayers can claim the difference between the basic rate relief the charity receives and their own rate through Self Assessment. HMRC's HS342 helpsheet also allows Gift Aid payments made after the tax year ends, but before you file, to be included in the earlier year's return — a useful lever when income is uneven.

Appreciated shares versus cash

For affluent donors, the question is often not whether to give but what to give.

In the UK, GOV.UK confirms you do not pay capital gains tax on shares given to charity, and you can deduct the value from your taxable income. HS342 describes qualifying investments to include shares or securities listed on a recognised stock exchange, units in an authorised unit trust and shares in an OEIC.

In the US, Publication 526 explains that the amount of a property contribution is generally the fair market value at the time of the gift, but special rules depending on the type of property, how long you have held it and the type of recipient can reduce it. Percentage-of-income limits also apply by organisation and property type.

The dual-taxpayer trap is that an asset exempt from capital gains tax on a gift in one system is not automatically sheltered in the other, and a deduction in one does not follow the gift across the border. The same block of shares given to a UK-only charity may attract UK relief while giving no US deduction — and a gift of US-listed stock to a dual-qualified organisation may need separate evidence for each authority. Establish which country's rules produce the better outcome before the transfer instruction goes to the broker.

Lifetime gifts versus legacies in your will

UK inheritance tax. GOV.UK states there is no inheritance tax on gifts you give to charities during your lifetime. On death, a charitable legacy is taken off the value of the estate before inheritance tax is calculated. GOV.UK sets the standard inheritance tax rate at 40%, and an estate can pay a reduced rate of 36% on some assets if 10% or more of the net value is left to charity. Because of the April 2024 restriction, these reliefs are aimed at UK charities. Whether your worldwide estate is within the UK net in the first place is a separate question, covered in our guide to UK inheritance tax and long-term residence for US citizens.

US estate and gift tax. The IRS lists property passing to qualified charities among the deductions in arriving at the taxable estate, and its gift tax FAQs confirm gifts to qualifying charities are deductible from the value of gifts made. The Form 706 instructions describe qualifying recipients largely by purpose — for example, a corporation or association organised and operated exclusively for charitable purposes — which is a different test from the income tax rule. Whether a particular UK charity satisfies it, and how the rules apply to a non-citizen estate, needs specific advice. Our overview of US estate and gift tax for Americans in the UK sets out the wider framework.

The practical consequence: a legacy that works for inheritance tax may not work for estate tax, and vice versa. Wills for dual taxpayers should name the precise legal entity and be reviewed against both systems.

Record-keeping for both systems

Keep one file that satisfies both authorities.

• US, cash gifts: the IRS requires a bank record or written communication showing the organisation, amount and date, and a contemporaneous written acknowledgment for any contribution of $250 or more.
• US, non-cash gifts: Topic 506 requires Form 8283 where the non-cash deduction exceeds $500, and Publication 526 requires a qualified appraisal for deductions over $5,000.
• UK, Gift Aid: GOV.UK asks higher rate taxpayers and certain others to keep records of the date, amount and charity, for at least 22 months from the end of the tax year.
• UK, shares and property: keep the legal transfer documents and any request from the charity to sell on its behalf.

Note the 2026 US change: the IRS states that from tax year 2026, taxpayers who do not itemise may deduct up to $1,000 ($2,000 filing jointly) of cash contributions to certain qualified organisations. It is modest for most of our clients, but it applies only to qualifying US recipients.

How we approach it

For a dual taxpayer we map three things before the gift: which country's relief is worth more on your actual income, whether the intended organisation is recognised in that country, and whether the asset being given changes the answer. For legacies, we coordinate with your estate lawyers so the will names entities that work under both inheritance tax and estate tax. A licensed CPA or Enrolled Agent reviews and signs off every US filing that leaves the firm, and UK positions are reviewed by an ACCA-qualified accountant. Learn more about our US-UK expat tax accountant service, or book a confidential consultation before your next significant gift.

This article is general information, not tax or legal advice, and does not create a professional relationship. It is not a recommendation to support any particular charity, fund or product. Charitable status, relief conditions and limits change, and the treatment of your gift depends on your own facts; confirm the current position with a licensed professional before acting.

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Reviewed by a CPA / Enrolled Agent. Last updated: 14 September 2026.

Official sources: GOV.UK — Tax relief when you donate to a charity: Gift Aid | GOV.UK — Donating land, property or shares | GOV.UK — Leaving gifts to charity in your will | GOV.UK — Keeping records | HMRC — Restriction of charitable reliefs to UK charities | HMRC — HS342 Charitable giving (2026) | GOV.UK — How Inheritance Tax works | GOV.UK — Inheritance Tax: gifts | IRS — Charitable contribution deductions | IRS — Publication 526 | IRS — Topic no. 506, Charitable contributions | IRS — Written acknowledgments | IRS — United Kingdom tax treaty documents | IRS — Estate tax | IRS — Frequently asked questions on gift taxes | IRS — Instructions for Form 706 | IRS — Tax Exempt Organization Search