Understanding and promoting the Payroll Giving scheme

Charities can accept donations made directly from salaries or pensions using the Payroll Giving scheme. It's a simple, tax effective way for donors to give to your charity directly from their earnings or their company or personal pension.

On this page:

What is Payroll Giving?

Payroll Giving lets donors make regular or one-off donations to charities of their choice directly from their earnings or company or personal pension.

Donations are made out of income before Income Tax is taken off, unlike Gift Aid donations. This means that donors are given tax relief on their donation immediately - and at their highest rate of tax. Charities do not make any repayment claims on Payroll Giving donations.

Top

How Payroll Giving works

The scheme is managed by Payroll Giving Agencies (PGAs) - which are themselves charities and approved by HMRC as PGAs - who run it on behalf of employers and pension providers.

An employee asks their payroll department to deduct regular charitable donations from their gross pay (before calculating their PAYE tax payable, but after National Insurance contributions). The employer then passes that money to a PGA, which sends the donations to the appropriate charities.

PGAs usually deduct a small administration fee for each donation. Sometimes the employer pays this on the donor's behalf.

Find contact details of Payroll Giving - approved Payroll Giving agencies

Top

Benefits of Payroll Giving

Payroll Giving is an easy, tax-effective way to give to charity - so it costs employees less to give more. The system is easy to opt in and out of, giving donors full control over their giving.

Benefits for charities

  • Their taxable income is reduced and they get all of the tax relief - so a donation of £10 costs a basic rate taxpayer £8 and costs 40 per cent or 50 per cent higher and additional rate taxpayers £6 or £5 respectively.
  • The donation goes straight from the donor's pay or pension via the PGA into the charity bank account.
  • It's a regular source of income - making it easier to budget and plan.
  • It's a way to communicate with and get to know donors (although donors can choose to remain anonymous) - the charity can build a relationship with them and employers or pension providers.

Benefits for donors

  • Their taxable income is reduced and they get all of the tax relief - so a donation of £10 costs a basic rate taxpayer £8 and costs 40% or 50% higher and additional rate taxpayers £6 or £5 respectively.
  • It can be anonymous - the employee doesn't have to agree to the charity knowing their name (and employers don't have to know which charity an employee chooses to support).
  • Donors don't have to remember to give - regular gifts continue to be sent to their chosen charity for as long as they choose.
  • It's flexible - donors can give to several different charities.

Find out more about giving to charity through your payslip or pension

Benefits for employers and pension providers

  • It's quick and easy to set up and run - the donations are administered by a PGA.
  • It's a way to show commitment to causes that staff care about.

Find out more about Payroll Giving: introduction for employers and pension providers

Top

Professional fundraising organisations

Your charity may want to use the services of a professional fundraising organisation to promote your cause and help you recruit new donors.

Find a Payroll Giving Professional Fundraising Organisation

Top

Contacting the HMRC Charities Helpline

For more help you can contact the Charities Helpline.

Contact the Charities Helpline

Top

More useful links

Read more about Payroll Giving in the detailed guidance notes

Understanding and promoting tax relief on donations of land, buildings or shares

Top