In this section:
- Tax relief when giving to charity through Gift Aid
- Tax relief when giving to charity through your payslip
- Tax relief when giving assets to charity
Tax relief when giving to charity through your payslip
If you pay tax through PAYE (Pay As You Earn), Payroll Giving offers a simple way to reduce the cost to you of making regular gifts to UK charities by allowing you to authorise your employer or company/personal pension payer to make the donation from your wages or pension before deducting any tax.
How Payroll Giving works
Payroll Giving allows you to make donations to charity directly from your pay or company/personal pension. The donations are made before Income Tax is worked out and deducted. Because of this, you only pay tax on what's left. This means that you get tax relief on your donation immediately - and at your highest rate of tax.
Example - basic rate tax and Payroll Giving
You pay tax at the basic rate of 20 per cent, and authorise a monthly donation of £10. That means you save £2 tax (20 per cent of £10). The actual cost of the donation to you is £8.
Example - higher rate tax and Payroll Giving
You pay tax at the higher rate of 40 per cent and authorise a monthly donation of £10. That means you save £4 (40 per cent of £10). The actual cost of the donation to you is £6.
Who can use Payroll Giving?
You can use Payroll Giving as long as both of the following apply:
- you are an employee or you get a company/personal pension and your employer or pension payer deducts tax through the PAYE system
- your employer or pension payer operates a Payroll Giving scheme
If your employer or pension payer does not operate a Payroll Giving scheme, you could ask if they would be willing to start one. They can find out about Payroll Giving schemes and contact details for Payroll Giving agencies on our website.
Payroll Giving schemes - information for employers
Alternatively they can call our Charities helpline on Tel 0845 302 0203 - select option five. Lines are open from 8.30 am to 6.00 pm, Monday to Friday.
How to make a donation using Payroll Giving
You can make a donation by authorising your employer or pension payer to deduct a set amount from your salary or pension income.
Your employer or pension payer hands over your gift to a government approved Payroll Giving agency, which then passes the money on to your chosen charity. You do not have to tell your employer or pension payer which charities you support. Instead you complete a simple form for the Payroll Giving agency to tell them where they should send your donations.
Some Payroll Giving agencies can provide you with a charity card or cheque book so that you can make gifts directly to any charity whenever you want to.
Once a gift has been deducted from your pay or pension no refund is possible.
Some agencies may charge a small fee, which is deducted from your donation, to cover administrative costs.
Payroll Giving and other gifts to charity
Payroll Giving does not affect any other donations you might want to make to charity. You can, for example, make other donations using Gift Aid if you wish.
Giving to charity through Gift Aid
Further information
Giving to charity through Payroll Giving - Frequently Asked Questions (FAQs)
