Payroll Giving

Payroll Giving is a scheme that allows you to make regular, tax-free donations to charities, directly through your salary. You can also donate from your pension payments. It’s essentially a method of reducing your taxable income, by giving to charity.

You can get involved if your employer is part of the scheme and if you’re paid via Pay As You Earn (PAYE). HMRC has a list of recognised charities that you can donate to.

How does Payroll Giving work?

When you donate via Payroll Giving, the donation taken from your salary is deducted from your gross pay after National Insurance, but before you’ve paid Income Tax. It can be used by the charity as an alternative to Gift Aid.

The way it works depends on the size of your salary and, therefore, what tax band you’re in. The higher your salary, the lower the impact on your take home pay!

Salary Tax band Tax rate
£12,571 – £50,270 Basic rate 20%
£50,271 – £125,140 Higher rate 40%
£125,141+ Additional rate 45%

Your donations are automatically deducted from your salary when you get paid, just like student loan repayments or PAYE income tax. If you are a basic rate taxpayer, you will be able to donate £1 to charity, whilst the real-world impact to your net income will only be 80p. If you pay the additional rate tax, you can donate £1 and the loss to your net income will only be 55p. This accounts for the money that you’d have lost to tax anyway so it’s highly tax-efficient. Everyone’s a winner!

What are the benefits of payroll giving?

  • You can donate flexibly
  • There are no fees for an employer if they choose to set it up themselves
  • It’s a tax-efficient method of donating
  • Employees can make regular donations automatically from their salaries
  • Depending on your salary, it costs less to donate more to your charity
  • It can be set up online

Frequently Asked Questions

  • What is GIft Aid?

    Gift Aid is a tax incentive that allows charities to claim back Income Tax (at the basic rate) on donations made through the scheme. For more information, read our helpful glossary page!

  • Is Payroll Giving mandatory?

    Not at all! Payroll Giving is just a more tax-efficient way of donating to charity via your salary. Instead of withdrawing £10 cash (that you’ve already been taxed on) and giving this to charity, you can give a charity £10 directly from your salary and it’ll only cost you £8 or less!

Search More Terms

View our latest news & insights

14 February 2024
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might a...
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might apply to your organization. However, understanding which taxes are relevant to your business is crucial for com...
17 January 2024
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They ty...
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They typically range from phone line bills, postage and stationery to computer software and travel costs. Being the o...