Payroll Giving 2026/27 | Give As You Earn Tax Relief Explained

Payroll Giving — also called Give As You Earn (GAYE) — lets an employee donate through an employer or pension payroll. The authorised amount is deducted after National Insurance but before PAYE income tax, so relief is given at the donor’s highest applicable income-tax rate. A £50 monthly pledge costs £40 at 20%, £30 at 40% or £27.50 at 45%, before any agency fee; the charity may receive less than £50 if the agency fee is deducted from the donation.

The key contrast with Gift Aid is timing: Gift Aid gives the charity the basic-rate tax back from HMRC and makes higher-rate taxpayers claim the difference themselves. See the exact effect on your pay with the Payroll Giving Calculator→, and check your tax band with the Salary Calculator→.

The 20%, 40% and 45% examples on this page use the income-tax rates commonly relevant in England, Wales and Northern Ireland. Scottish income-tax rates are different, so Scottish taxpayers should use the rate shown in their own tax calculation.

Payroll Giving vs Gift Aid

With Gift Aid, a £10 donation from after-tax income lets the charity claim £2.50 back. A 40% taxpayer can claim a further £2.50, giving a £7.50 net cost for a £12.50 charity receipt; a 45% taxpayer can claim £3.125, giving a £6.875 net cost. Payroll Giving instead gives the donor’s income-tax relief through payroll, but the donation is not eligible for Gift Aid and an agency fee may reduce the charity’s receipt.

How Payroll Giving Works

You choose a charity and an amount, your employer or pension provider deducts it from pay, and an HMRC-approved Payroll Giving agency passes it to the charity. HMRC guidance says there is no statutory limit on the amount an employee can give from pay; payroll and scheme mechanics still determine what can be deducted in a particular pay run.

• Any charity accepted for UK tax purposes can qualify, and agencies often allow a pledge to be split across several charities.
• You can leave the scheme with reasonable notice; do not assume an immediate stop before the next payroll cut-off.
• No separate tax-relief claim — the donation is relieved at source, but the pay shown on P60/P45 and adjusted-income calculations can still be affected.
• Agency fees vary — the agency may deduct a fee from the donation, or the employer may pay it.
• Not available to the self-employed — they use Gift Aid instead.

Employer Matching

Some employers match Payroll Giving donations, often subject to their own ratio, cap and scheme terms. Do not assume the employer match creates an additional personal tax deduction for the employee. If an employer matches a £50 monthly pledge at 1:1, the nominal amount sent to charity is £100 before agency fees; at a 40% income-tax rate the employee’s own pledge costs £30 a month.

Fees, Caps and Fine Print

Payroll Giving has no statutory minimum or maximum in HMRC’s detailed guidance. Agency fees are set by the scheme and may be deducted before the charity receives the money unless the employer pays them. An employer is not required to offer the scheme and may incur administration costs, although those costs can generally be deductible to the employer. If you leave the job, the arrangement normally needs to be set up again with the new employer or replaced with another giving method. Payroll Giving does not reduce National Insurance, and the tax-relieved pay figure can matter to adjusted-income calculations even though there is no separate donation claim.

Who Should Use Payroll Giving

Payroll Giving suits people paid through PAYE or an occupational pension who want income-tax relief at source. The examples below use the 20%, 40% and 45% rates applicable in England, Wales and Northern Ireland; Scottish income-tax rates differ. Gift Aid may produce a larger charity receipt because the charity claims 25%, while Payroll Giving may reduce the donor’s cost and avoid a separate higher-rate claim. Compare the actual agency fee and any employer match before deciding.

Advantages and Disadvantages

The trade-off is practical: Gift Aid can deliver 25% more to the charity for a qualifying donation, while Payroll Giving can cost the donor less at higher tax rates and needs no separate relief claim. The better route depends on the donor’s tax position, agency fee and employer match.

Check the payslip and charity receipt

The amount authorised, the amount deducted from pay and the amount received by the charity can be different. Check the payslip after the first deduction, ask the employer or agency how its fee is handled and keep the charity's receipt or confirmation. If the deduction is missing, duplicated or taken from the wrong pay period, raise it with payroll before assuming that the tax relief has been applied.

Payroll Giving is not the same as salary sacrifice. A Payroll Giving pledge is a charitable deduction from pay with income-tax relief at source; salary sacrifice changes the contractual cash salary in exchange for an approved benefit and has its own National Insurance, minimum-wage and employment-law rules. Do not model a donation using a salary-sacrifice calculator or describe an employer match as a tax deduction for the employee.

For a Scottish taxpayer, use the marginal income-tax rate actually applicable to the donor's non-savings income. A 20%, 40% or 45% illustration from the rest of the UK may not describe the Scottish result. Where income is close to a band edge, compare the payroll calculation with the annual tax position and keep the P60, payslips, agency statement, matching policy and donation authorisation together.

Review the pledge after a pay rise, job change, unpaid leave, retirement or change in tax residence. A lower income-tax band can change the net cost, and leaving an employer can stop both the deduction and any match. Set a new arrangement only after confirming the first deduction date and the charity details.

Keep the annual giving record with your payroll documents.

Worked Examples

Example 1 — Basic rate. Alex earns £30,000 and pledges £50 a month. Relief at 20% means his net cost is £40 a month; the nominal donation is £600 a year before any agency fee.

Example 2 — Higher rate with employer match. Priya earns £65,000 and pledges £50 a month; her employer matches 1:1. Relief at 40% makes her own pledge cost £30 a month, and the nominal amount sent is £100 a month before any agency fee.

Her £360 net annual cost delivers £1,200 to charity — an uplift of over 230%.

Example 3 — Additional rate. James earns £200,000 and pledges £100 a month. Relief at 45% leaves a net cost of £55 a month, or £660 a year, while the charity receives £1,200. Under Gift Aid with the additional-rate claim, the same £100 would cost him £68.75 net — Payroll Giving saves £13.75 a month.

Frequently Asked Questions

See your net pay with the Payroll Giving Calculator→ and the Salary Calculator→. Pair this guide with Gift Aid Charitable Donations 2026/27 and Tax Codes Explained 2026/27 for the wider charitable-giving picture.

Keep a payroll-giving audit trail

Keep the authorisation form, charity nomination, agency details, employer matching terms and the first payslip showing the deduction. Compare the authorised amount with the amount actually sent, particularly where an agency fee is possible. If the donor changes employer, tax residence, working hours or pay frequency, record the date the old instruction stops and the new instruction begins. This avoids counting a missed deduction as a tax claim or treating an employer match as the employee’s own donation.

For higher earners, retain the P60, P45 and Self Assessment working papers if adjusted total income, pension relief or another relief limit is relevant. Payroll Giving normally operates automatically through PAYE, but the surrounding income-tax calculation can still require evidence. Use the current HMRC guidance for the relevant tax year and ask the employer or agency to correct payroll records promptly when a deduction is wrong.

Official sources

• GOV.UK: Payroll Giving
• GOV.UK: Donating straight from your wages or pension
• HMRC: Charities detailed guidance notes — Chapter 4 Payroll Giving
• HMRC: HS342 Charitable giving 2026
• HMRC: Payroll Giving approved agencies