Tax relief when giving to charity through your payslip or pension

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. If your employer or company/personal pension provider runs a Payroll Giving Scheme, you simply authorise them 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 after your National Insurance contributions are calculated but 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 and you get paid weekly or monthly through PAYE
you get a company and/or personal pension and your provider deducts tax through PAYE

In addition, your employer or pension provider needs to run a Payroll Giving Scheme. If they don’t, you could ask if they would be willing to start one. They can find out about Payroll Giving and contact details for Payroll Giving Agencies by following the link at the end of the section.

Alternatively they can call the charities helpline on 0845 302 0203 - select option five. Lines are open from 8.00 am to 5.00 pm, Monday to Friday.

Payroll giving - information for employers and pension providers

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. You can give anonymously – your chosen charity doesn’t need to know your details

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 providing you pay at least as much tax as the charity will receive in Gift Aid tax repayments