Payroll Giving – features explained for UK employers

Last checked and updated on 28 March 2022


The Payroll Giving scheme is a simple and tax-effective way for UK employers to offer their employees the opportunity to donate to charity through their payroll.

Under the scheme, donors can choose to give any amount of money to any registered charity of their choice, and the donation is deducted from their pay before tax is calculated. This means that the donor pays less tax, and the charity receives more money.

What is Payroll Giving?

The Payroll Giving scheme is a simple and tax-efficient way for UK employers to make regular donations to charity.

Employers can choose to donate to any registered UK charity, and employees can elect to have their donations deducted from their pay before tax. This means that the employee’s donation is made net of basic rate tax, and the charity receives the full amount of the donation.

The scheme is administered by HM Revenue and Customs (HMRC), and employers can register for the scheme online.

The scheme is a great way for employers to support the charities that are important to their employees, and to help make a difference to the lives of those in need.

How does the Payroll Giving scheme work?

The scheme is open to all UK taxpayers, and there is no minimum or maximum donation amount.

Employers can choose to offer the scheme to all of their employees, or just selected employees. They can also choose to match employee donations, or make a simple donation themselves.

How to sign up for Payroll Giving

Employers can register online.

When registering, employers will need to provide HMRC with their contact details and bank account information.

Once registered, employers will need to provide HMRC with the details of any employees who wish to take part in the scheme. They will also need to set up a payroll giving arrangement with a chosen charity or charities.

How will Payroll Giving affect my employees?

Employees can elect to have their donations deducted from their pay before tax is calculated. This means that the employee’s donation is made net of basic rate tax, and the charity receives the full amount of the donation.

Employees can change or stop their donations at any time.

What are the benefits of Payroll Giving?

The main benefit is that it is a simple and tax-efficient way for employers to make regular donations to charity.

The scheme is also flexible, and employees can change or stop their donations at any time.

Another benefit is that it can help to build goodwill and staff morale. Employers who offer the scheme to their employees can show that they are committed to supporting the causes that are important to their employees.

What are the disadvantages?

The main disadvantage is that it is only open to UK taxpayers. This means that employers who have employees from other countries may not be able to take advantage of the scheme.

Another disadvantage is that it can be difficult to promote the scheme to employees, as they may not be aware of it or understand how it works.

How much does Payroll Giving cost?

There is no charge for employers to register, and no minimum or maximum donation amount.

Employers can choose to match employee donations, or make a simple donation themselves.

What are the rules?

The scheme is open to all UK taxpayers, and there is no minimum or maximum donation amount.

Employers can choose to offer the scheme to all of their employees, or just selected employees. They can also choose to match employee donations, or make a simple donation themselves.

How to cancel Payroll Giving

Employers can cancel their registration at any time by contacting HMRC.

When cancelling, employers will need to provide HMRC with their contact details and bank account information.

How to promote Payroll Giving

There is no one-size-fits-all approach to promoting Payroll Giving, as every employer is different. However, there are a few general tips that may be helpful:

  • Use internal communications channels, such as employee newsletters or intranets, to raise awareness of the scheme.
  • Hold staff briefings or information sessions to explain how the scheme works and how employees can take part.
  • Encourage senior managers and team leaders to promote the scheme to their teams.
  • Display posters or leaflets about Payroll Giving in staff areas, such as break rooms or canteen.
  • Include information about Payroll Giving in new employee induction packs.

What other options are open to businesses that want to encourage charitable giving?

There are a number of other options open to businesses that want to encourage charitable giving, such as:

  • payroll deduction schemes
  • corporate philanthropy programmes
  • matched giving schemes
  • employee volunteer programmes.

Which option is best will depend on the individual business and what works best for their employees.

Payroll Giving versus Gift Aid

Payroll Giving and Gift Aid are both tax-efficient ways of giving to charity, but there are some key differences between the two schemes:

Payroll Giving is open to all UK taxpayers, regardless of their income. Gift Aid is only available to taxpayers who pay UK Income Tax or Capital Gains Tax.

Payroll Giving donations are made net of basic rate tax, so the charity receives the full amount of the donation. Gift Aid donations are made gross of basic rate tax, so the charity must claim back the basic rate tax from HMRC.

Payroll Giving donations can be made to any UK-registered charity. Gift Aid donations can only be made to charities that are registered with HMRC.

Payroll Giving is administered by HM Revenue and Customs (HMRC). Gift Aid is administered by charities themselves.

How to choose a charity

There are over 160,000 charities registered in the UK, so choosing a charity to support can be a daunting task.

  • Here are a few things to consider when choosing a charity for Payroll Giving:
  • What causes or issues are you passionate about?
  • Do you want to support a local, national or international charity?
  • Do you want to support a small or large charity?
  • How much money do you want to donate?

Once you have considered these questions, you can start to narrow down your options and choose a charity that is right for you.

If you are an employee who wants to take part in Payroll Giving, speak to your employer to see if they offer the scheme. If they do not, you can still make donations through the HMRC website.

Closing words

Payroll Giving is a simple and tax-efficient way for employers to make regular donations to charity. The scheme is flexible, and employees can change or stop their donations at any time. It can also help to build goodwill and staff morale.

Payroll Giving is a worthwhile scheme for both employers and employees, and we would encourage you to consider taking part.

If you have any questions about Payroll Giving, or would like more information, please contact HM Revenue and Customs (HMRC).

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Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. We recommend that you always speak to a qualified professional to get advice about how to operate your business under your specific requirements and circumstances.