The basics you need to know about payroll giving

How does payroll giving work?

The way payroll giving works is simple.

First, check if your employer offers a payroll giving scheme as part of your employee benefits. You can do this by checking your intranet or benefits hub if your company has one, or by checking directly with your HR/payroll team.

Then, during the enrolment process, you will be asked to confirm the amount you want to donate, to choose the method of giving that suits you best and the charity or charities (you can support more than one) you want to support.

Once this is all set up, your donation will be taken from your pay automatically before tax is deducted. You can start, stop, change or amend your donations at any time.

Can I give one-off donations through payroll giving?

Donations can be made monthly or on a more ad-hoc, one-off basis. You can also give additional donations at the end of the tax year or if you receive a bonus, subject to your wishes.

Is payroll giving tax-efficient?

Payroll giving is one of the most tax-effective ways you can give to charity. Donations are taken from your gross pay, or pension, after your National Insurance contributions have been deducted, but before Income Tax is calculated and removed.

You receive tax relief on your donation. The amount will differ depending on the rate of tax you normally pay, making your money go further at no additional cost to you.

For example, if you are a 20% taxpayer, 80% of your contribution amount will be taken from your salary and 20% will be taken from the tax that would have gone to HMRC. This means your tax is calculated on a lower amount, which could change your tax bracket and lower the amount of tax you pay.

In other words, if you donate £20, your chosen charity will receive the full amount, but the donation will cost you £16 if you are a 20% taxpayer.

What are the benefits of payroll giving for charities?

Donations made through payroll giving provide charities with a regular and dependable source of income. As a result, they can plan more effectively, which supports their long-term resilience.

In addition, many charities prefer payroll giving because it removes the administration it would usually take for them to claim Gift Aid, giving them more time and resources to focus on their mission.

Mervi Slade, Product and Programme Manager for Payroll Giving at Cancer Research UK, says, “Payroll Giving is a great source of income for charities. Regular gifts allow us to plan for the future, donations already include tax and we do not have to claim Gift Aid. Additionally, some employers match donations, enabling charities to do even more with these contributions.”

Use our Awareness Calendar to explore global, national and local charity awareness campaigns or religious holidays and festivals to see which cause you may want to support.

How much of a difference can I make through payroll giving?

Payroll giving has raised more than £2 billion for charitable organisations across the UK, since it was established in 1987.

As an employee signed up to payroll giving, you will be able to consistently support the charities and causes you care about and secure greater impact through your donation. Payroll giving saves your chosen charities the time and resources it takes to claim Gift Aid, enabling them to focus on fulfilling their mission and planning for the future.

Many employers also choose to cover the administration fees and/or match their employees’ donations, resulting in charities receiving a greater sum.

Is payroll giving salary sacrifice?

No. The UK Government defines salary sacrifice as, “An agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit”. For example, this can include childcare vouchers, increased pension contributions and cycle to work schemes.

This is different to payroll giving. Being part of your employer’s payroll giving scheme does not affect your final salary and your donation is deducted from your pay after your National Insurance Contribution, but before Income Tax.

How can I get my employer to sign up to payroll giving?

Raising awareness with your employer, who can set up the scheme, is a great place to start. You can find out more about payroll giving here.

As the UK’s largest Payroll Giving Agency, we can also help you. We have been running Give As You Earn (GAYE), our payroll giving scheme, since 1987.

Ask your HR/payroll team to contact us via our GAYE application form and our customer services team will be in touch.  

If you have any further questions, get in touch via our online enquiry form or contact our Customer Services team on 03000 123 000.