Payroll Giving

A small donation each pay day can help empower your people in many ways. Donating through your salary is a tax efficient way of supporting charity.

What is donating through your salary?

It is often called Payroll Giving, and is a tax-efficient way of giving to any UK charity directly from your pay. 

The money comes out of your salary before it is taxed and you receive immediate tax relief of up to £5.00 or £4.00 for every £10.00 donated, depending on your maximum tax bracket.

What are the benefits?

Making a monthly donation through your payroll is one of the most cost-effective ways of helping empower young people and those in need.

Giving to charity before you are taxed means the gift is worth more, because the money you would have given to the Inland Revenue goes to charity instead.

From an employer's perspective, Payroll Giving is simple and inexpensive to set up and run. Payroll Giving is a great way for businesses, through the Quality Mark scheme, to demonstrate commitment to the causes that their employees care about.

How is it worked out?

Unlike Gift Aid, all the tax relief is given to the donor. The donation is simply a pre-tax deduction, reducing the amount of Income Tax taken from the donor's pay. This means the donor gets immediate tax relief at their highest rate of tax. So a £10.00 donation would generate tax relief of £5.00 and £4.00 for higher rate tax payers and £2.00 for basic rate tax payers.

Is it easy to set up?

All organisations, charities and businesses alike, are encouraged to offer Payroll Giving to their staff.

Employers simply sign up with an HMRC approved Payroll Giving Agency (PGA) that will distribute donations to the employees' favoured charities. 

Donors are asked to complete a mandate, stating how much they wish to give and to which Charities and the employer arranges for the donation to come off their salary as a pre-tax deduction. All modern payroll systems can facilitate Payroll Giving. Employers send the deductions in one sum each month alongside a list of donors and new donor mandate forms, if appropriate, to their PGA, usually at the same time as they send the PAYE tax to HMRC.

Payroll Giving Agencies (PGAs)

PGAs are registered charities that are regulated by HMRC. They receive donations and send money to chosen charities each month, creating an audit trail.

Employers need to sign a simple contract with a PGA. This process does not require legal input. The PGA can also give advice about how to promote a scheme. Currently, there are around a dozen PGAs to choose from across the UK (a list is available online on HMRC's website here).

Most PGAs make a small adminstration charge, which is deducted from employees' donations before they are sent on to the nominated charities. An increasing number of employers now pay that administration charge to enable an employee's donations to be forwarded in full.

Approved by HMRC, Giveall is unique among Payroll Giving Agencies as being the only one that is fully automated and is commission-free for every Non-Profit Organisation, which registers with Giveall.  

Payroll Giving Quality Mark

The Payroll Giving Quality Mark is an annual programme that recognises and rewards organisations for making Payroll Giving available to their staff. Providing employers with a logo for signing up to Payroll Giving and Bronze, Silver or Gold Awards for those that achieve target employee participation rates.  

The Quality Mark aims to provide UK charities with sustainable income streams by increasing participation in Payroll Giving. Awards are distributed on an annual basis.

In 2007, the National Payroll Giving Excellence Awards were introduced. All employers with current Bronze, Silver or Gold Quality Mark Awards can apply and the ceremony takes place at a prestigious event held each October at HM Treasury.

Using Payroll Giving effectively

There are a number of advantages to Payroll Giving, not only for charities but also for donors and employers. It is important to understand these benefits if you are going to make the best use of Payroll Giving in your fundraising.

Benefits for charities:

  • Providing a reliable income stream.
  • Payroll donors are likely to continue to give for some time.
  • No administrative burden associated with processing donations.
  • Potential employer matching.

Benefits for the donor:

  • Costs less to give more.
  • Payroll Giving is easy to set up and to maintain.

Benefits for employers:

  • Corporate Social Responsibility / Corporate Community Investment profile.
  • Boosts employee morale and sense of team-building and can therefore aid staff retention.
  • Aids recruitment (increasingly, graduate students ask about the social responsibility and ethical profile of businesses).
  • Can earn the National Payroll Quality Mark Certificate.

Payroll Giving - the Logo

The Payroll Giving logo is available to all charities and employers that wish to promote the scheme. To make use of the logo on your materials, download it from the Payroll Giving centre website here.