What is a Payroll Giving Scheme?

Learn about Payroll Giving Schemes, a tax-efficient way for UK employees to donate directly to charities from their gross pay.

A Payroll Giving Scheme, also known as Give As You Earn, is a tax-efficient way for UK employees to donate to registered charities directly from their gross salary. This scheme allows employees to make regular donations without paying tax on the donated amount, meaning charities receive the full benefit of the donation pre-tax. The scheme was introduced in 1987 and is regulated by HMRC.

How it works

To participate in Payroll Giving, an employer must first set up the scheme in partnership with a Payroll Giving Agency (PGA), which handles the administration and ensures donations are transferred to the chosen charities. Employees decide the amount they wish to donate and the charity or charities they want to support. The donation is then deducted from their salary before tax but after National Insurance, offering up to 45% tax relief depending on the employee’s tax bracket.

Benefits of payroll giving

• For Employees: Payroll Giving is simple to set up and manage. Employees benefit from tax relief, making their donations more impactful. For example, a £10 donation only costs a basic rate taxpayer £8, while a higher rate taxpayer’s donation costs £6.
• For Employers: implementing a Payroll Giving scheme enhances corporate social responsibility and can improve employee morale and retention. Companies can receive recognition through the Payroll Giving Quality Mark and the National Payroll Giving Excellence Awards.
• For Charities: charities receive regular, reliable income, which helps in planning and executing long-term projects. Additionally, the administration burden is reduced since they do not need to process Gift Aid claims for these donations.

Setting up the scheme

Employers can set up a Payroll Giving scheme by contacting a Payroll Giving Agency. The agency facilitates the donation process, ensuring that the funds are appropriately distributed to the selected charities. Some agencies may charge an administration fee, but employers can choose to cover this cost to ensure the full donation amount reaches the charity.

In 2019, around £134 million was raised for UK-registered charities through Payroll Giving, showcasing its significant impact on the charitable sector in the UK.

If setting up payroll giving isn’t an option for you, you can still contribute with a one-off donation by clicking the button below. Every contribution matters in preventing food from going to landfill.