Payroll giving allows you to make charitable donations before the deduction of tax from your pay packet, enabling you to give more to charity at no extra cost.
It is sometimes referred to as Give As You Earn (GAYE) or workplace giving. The only requirement is that your employer operates the Pay As You Earn (PAYE) tax system, the most common system in use.
Download the form now, or learn more below.
On this page
- What is payroll giving?
- How does it work?
- How much will I pay?
- I am a higher-rate taxpayer. How can I benefit?
- How do I begin payroll giving?
- I'm an employer. How do I offer payroll giving?
When you donate to charity through payroll giving, your employer deducts your donation from your salary after your national insurance contribution but before income tax. You get immediate tax relief at the highest rate of tax you pay.
This means that in order to donate a total of £10 to charity, a donor who pays income tax at the 20% basic rate woud only need to pay £8 from their salary. A donor who pays tax at the higher 40% rate would only need to pay £6 to make a £10 donation to charity.*
The deduction is made by the employer through their payroll system. National insurance is taken first, followed by the employee's charitable donation, and finally income tax and any other deductions.
The donation is then passed to a payroll giving agency, who distribute the money to the donors' chosen charities. The agencies who administer donations for us are the Charities Aid Foundation (CAF), Charitable Giving, the Charities Trust and Stewardship.
Each agency has a small admin charge payeable by the charity, although some employers choose to pay the administration fee instead. Many employers will match all or a proportion of the employee's contribution as well. It's worth asking your employer what they are able to offer to maximise your donation to charity.
If you choose to pay £20 yourself, your total donation will increase to £25 as a basic-rate taxpayer or £33.32 as a higher-rate taxpayer. If you are thinking of sponsoring a child for £20, this is an easy way to give more at no extra cost.
Child sponsorship with SOS Children's Villages starts at £20. Through payroll giving, a basic-rate taxpayer can match this amount by donating £16, because the remaining £4 is paid for by tax relief. A higher-rate taxpayer can donate £20 by paying as little as £12.
If you complete a self assessment tax return and are entitled to a tax refund, you can choose to have all or part of the repayment sent directly to charity. This is called “self-assessment giving” or “SA donate”. You can also ask that the repayment is made as a Gift Aid donation.
To use self-assessment giving you need to enter a charity reference code in the space provided on the “Giving your tax repayment to charity” form that comes with your tax return.
Our reference code for this purpose is: AAD70CG
If your employer supports payroll giving, simply download and fill in this form (pdf), then return it to us by post using the address at the bottom, or email a scanned copy to email@example.com. We'll do the rest.
If your employer doesn't offer payroll giving, why not suggest that they start? It's virtually cost-free and can help them meet their corporate social responsibility commitments (CSR) while enhancing their relationship with their employees. Many employers choose match employee donations, and this also boosts CSR.
Payroll giving is a fantastic way for employers to meet their corporate social responsibility (CSR) commitments while improving their relationship with employees. It is virtually cost-free as administration is carried out by an agency. Most modern payroll systems support payroll giving, and, for most, it quickly becomes a normal part of your payroll process.
We have more detailed information about payroll giving for employers in our companies section. Read the HMRC guidance for employers on payroll giving.
Payroll giving is one of the most cost-effective and tax-efficient ways to donate to charity. Visit our donate page to find out about other ways to give.
*All donations may be subject to a small administration fee, typically up to 5% of the total amount, payeable by the charity to the agency which administrates the donation but sometimes covered by the employer. Go the How does it work? section to find out more.