How is payroll giving different to gift aid?
When you make a direct donation to charity, you're often given
the option to tick a box that allows the charity to apply for
Gift Aid on your
donation. This means that - if you're are a UK taxpayer -
the charity can claim back 25% tax on your donation from the
Government (regardless of the rate of tax you pay).
For example, if you're a lower rate taxpayer and donate £20
directly to charity, it costs you £20 and the charity receives
£25 - once they've claimed the Gift Aid back. While the amount
going to charity is higher, the charity carries the cost and hassle
of claiming back the tax.
With payroll giving your donation not only costs you less, you
receive a tax benefit and the charity automatically receives the
donation - avoiding the added administrative burden of collecting
Gift Aid.