What is payroll giving?
Charitable organisations depend on donations to fund their vital work, and many people choose to support causes close to their hearts in various ways. One simple and tax-efficient method is payroll giving (also known as Give As You Earn or GAYE).
This scheme allows employees to donate directly to charity from their salary or pension. Importantly, these donations are taken from a persons’ salary prior to income tax being applied. This means an immediate tax relief with the donation effectively ‘costing less’ to the employee while the charity receives the full intended amount.
How it works
- Donations are made before income tax but after National Insurance
- Tax relief is given at the donor’s highest rate of income tax. Meaning that the benefit is more valuable for high-rate taxpayers and additional-rate taxpayers.
- For example: a 40% taxpayer donates £10 through payroll giving. It will only cost them £6 but the charity still receives the full £10.
How can employers get involved
To be able to do this, an employer must operate an HMRC-approved payroll giving scheme through a registered Payroll Giving Agency. Not all employers offer this, so employees should check with their HR or payroll department.
Why choose payroll giving
- Immediate tax benefit
- Flexible – employees can support one or multiple charities
- Cost-effective, especially for higher-rate taxpayers
- Reliable income for charities
How Moore South can help
Ready to make this work for your business? At Moore South, our payroll and tax teams’ can guide you through setting up a compliant payroll giving scheme, benefitting your staff while supporting the charities that matter most to them. Get in touch with our team today to discuss how this could fit into your payroll processes and wider employee benefits strategy.