What is Payroll Giving

Payroll Giving is a scheme run through HMRC which allows employees to make simple, tax-effective donations to any UK charity or good cause.

Employers who pay employees or pensioners through PAYE can set up a Payroll Giving scheme.

Donations are deducted from gross pay – before tax is deducted. This gives immediate tax relief on donations and means it costs less to donate.

How does it work?

Payroll Giving is one of the easiest ways of improving employee participation in charitable giving.

The donation is taken from gross pay and before tax is deducted. A donation of £10.00 per month therefore will cost the donor just £8.00.

The table below highlights the benefits according to tax rate:

Donor pledgeAs a 20% tax payer you payAs a 40% tax payer you payAs a 45% tax payer you pay
£5.00£4.00£3.00£2.75
£10.00£8.00£6.00£5.50
£50.00£40.00£30.00£27.50

Benefits for employers

  • Easy to set up
  • Hassle-free administration
  • Any costs incurred in launching and promoting a scheme to employees may be offset against Corporation Tax as tax deductible expenses

Benefits for employees

  • Regular tax-effective donations
  • Donate to any UK registered charity / good cause
  • One donation can be split between multiple charities
  • Make a one off tax-free donation at any time – e.g. if they receive a bonus