Giving to charity Payroll giving

If your employer offers a payroll giving scheme, you can support a charity with regular donations direct from your salary.

Your donation is deducted from your salary before tax – so the charity receives your donation before tax is deducted from it. This means the charity doesn't have to reclaim it from HMRC, and it costs you less to give.

How does it work?

You can give this way providing your employer offers a scheme, then you simply authorise it to deduct the amount you want to give to charity from your pay. Your employer then pays those donations to a Payroll Giving Agency (these are approved by HM Revenue & Customs) and the Agency sends on your donation to the charity of your choice.

Once your donation is set up, you don't have to do any more. Each week or month, as regular as clockwork, your charity will benefit.

How much does the charity get?

The charity will receive the amount you ask to be deducted from your pay. The agreed deductions your employer makes from your pay are done before you pay tax, which means that you get tax relief included in your donation at your top rate of tax.

The table below shows how much a donation of £5 or £10 would cost you depending on what level of tax you pay.

So how does the charity benefit?

The charity benefits from the fact that it receives a regular flow of funds it can count on. Also –you can always decide to give a bit more, as it is costing you less in tax.

How can I find out if my employer offers Payroll Giving?

Ask your employer's payroll department. If they don't offer a scheme, suggest that they start one - it is easy and inexpensive to run.

How do I know if I am eligible to join the scheme?

If your employer deducts tax through Pay As You Earn (PAYE) then you will be eligible to join your employer’s payroll giving scheme, providing it offers one.
If you are a pensioner, receiving a pension from your employer’s occupational pension scheme – again with tax deducted through PAYE, then you are also eligible to join the scheme.

Do I have to tell my employer which charity I wish to support?

No. The Payroll Giving Agency will provide you with a charity nomination form which you can complete and return directly to the agency. Alternatively, the agency might provide you with a charity card or charity cheque book so that you can give directly to the charities of your choice. The Payroll Giving Agency will keep your choice of charity confidential from your employer if you wish.

Can I change the charities I wish to support and the amount I pay?

You can change the charities you support by simply letting the Payroll Giving Agency that deals you're your scheme know. You can also change the amount you pay, however, to keep costs down your employer may limit the number of times you can change the amount of your donation to once or twice a year.

If you want to stop giving altogether, simply tell your employer’s payroll department.

Will administration charges be deducted from my donations?

Most Payroll Giving agencies do make a small charge which they deduct from your donations before distributing them to charity. The charge is normally no more than 4 per cent of the donation, or 25p per donation, whichever is the greater.

Some employers pay the agency's charges so that the full amount of your donations can go to charity.

You can find out more about payroll giving on HMRC’s website.

For the latest information on Payroll Giving, read the Which? Essential Guide: Tax Handbook 2009/10.