Payroll Giving - donors' questions answered
What is Payroll Giving?
Payroll Giving is a simple, tax effective way to give to charity directly from your pay. Surveys show that each month around two thirds of us give to charity. Giving regularly to your favourite UK charity cause is an excellent way to help others and do something to make the world a better place.
How does Payroll Giving work?
Providing that your employer offers a Payroll Giving scheme it couldn’t be simpler. You authorise your employer to deduct regular charitable donations from your pay. Your employer then pays those donations to a Payroll Giving Agency approved by HM Revenue & Customs (HMRC). The agency then distributes the money to the charity or charities of your choice.
What are the benefits of Payroll Giving?
For you
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 and it is simple to do.
| Employee's pledge to charity (gross) | Actual cost to employee @ 20 per cent tax | Actual cost to employee@ 40 per cent tax |
|---|---|---|
| £5.00 | £4.00 | £3.00 |
| £10.00 | £8.00 | £6.00 |
For example, if you pay tax at the basic rate it will only cost you £4.00 to donate £5.00 to the charity of your choice as shown in the table above.
For your charity
The main benefit of Payroll Giving is to create a regular flow of funds for the benefit of the charity or charities of your choice.
How can I find out if my employer offers Payroll Giving?
Ask your employer's payroll department. If they do not offer a scheme, suggest that they start one - it is easy and inexpensive to run. They can find out more about how to get started in the HMRC Guidance for employers.
How do I know if I am eligible to join the scheme?
You will be eligible provided that you are an employee or pensioner and that your employer deducts Pay As You Earn (PAYE) tax from your pay or pension.
How do I know that my chosen charity has received my donation?
Your donation will be very important to the charity and they may well write to you to thank you. Otherwise, if you want to check that your donation has been received, you can ask the Payroll Giving Agency for confirmation. HMRC check, periodically, that Payroll Giving agencies are operating the scheme correctly.
How do I choose which charity to support?
This is a very personal decision. You can choose any UK charity you like. It might be a large national charity, or it might be a small charity such as your local church or Parent Teacher Association. If you are unsure whether the cause you wish to support is a charity, the Payroll Giving Agency will be able to tell you.
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?
Yes, at any time. Simply tell the Payroll Giving Agency. But remember - charities benefit most from regular donations. So try not to change your choice of charity too often.
Will I get unwanted mail from charities asking for money?
Your chosen charity may well want to write to thank you for your donations and tell you how they are being used. The information you provide is protected under the Data Protection Act and can be used only for the purpose for which it was given. You can ask for your name and address to be withheld from the charity if you wish.
How much should I give?
This is also a very personal decision. There are no limits on how little or how much you can give. You should work out how much you can afford to give every week or month.
Can I change the amount I give?
Yes, although to keep administration costs down your employer may limit the number of times you can change the amount of your donation to once or twice a year.
Can I stop giving?
Yes, at any time. Simply tell your employer's payroll department.
Can my donations be refunded?
No. Once a donation has been deducted from your pay it must go to charity.
Will administration charges be deducted from my donations?
Most Payroll Giving agencies 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.
Will this affect other donations I make to charity?
No. You can continue to make other donations without affecting the amounts you give through Payroll Giving. If you want to know about other tax relief for giving to charity please see our helpsheet 'Giving to Charity by individuals'.
I'm interested, what should I do now?
Talk to your employer and find out if Payroll Giving is already operated by them.
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