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Pay­roll Giv­ing (UK) or GAYE

TagLast edit: Nov 14, 2023, 8:47 PM by Gemma 🔸

Payroll Giving (sometimes referred to as Give As You Earn (GAYE)) is a way of giving money to charity through your employer pre-tax (but after National Insurance). The amount of tax relief you get depends on the rate of tax you pay but it is particularly cost effective for higher rate taxpayers.

Your employer needs to set up and run the scheme which involves making deductions each time they run payroll. The donation will be taken from employees’ pay before tax but after National Insurance.

The donations are then sent to a Payroll Giving agency who then pass them on to the chosen charities.

Tax relief

The tax relief you get depends on the rate of tax you pay. To donate £1, you pay:

The tax relief you get is different if you live in Scotland. To donate £1, you pay:

From Tax Policy Associates

Payroll giving vs Gift Aid

Payroll

You earn £60,000 per year (making your marginal tax band 40%). You donate £1,500 through payroll giving. Your take-home pay only reduces by £900. (From £43,849.40 to £42,949.40, assuming no other deductions).

Gift Aid

You earn £60,000 per year (making your marginal tax band 40%). You donate £1,200 to a charity after you’ve been paid. The charity can claim 25% from the government, giving them £1,500. And you can claim a tax rebate of £300 (1500 * 0.2), meaning you are only out-of-pocket £900.

Comparison

Source: https://​​forum.effectivealtruism.org/​​posts/​​KsgmLHwqRj7fZ9szo/​​uk-personal-finance-tips-and-info#Payroll_giving

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