Answers · UK 2025/26

What is Payroll Giving and how much tax relief does it give?

Payroll Giving lets you donate to charity directly from your gross salary before tax is deducted, so you get tax relief immediately at your full marginal rate through payroll rather than needing to reclaim it separately. A £100 donation costs a basic rate taxpayer £80, a higher rate taxpayer £60, and an additional rate taxpayer £55, because relief is given at 20%, 40% and 45% respectively.

Last updated: 1 July 2026Last reviewed: 1 July 2026How we verify

Full answer

Payroll Giving (also called Give As You Earn) is a scheme that lets employees donate to UK-registered charities straight from their gross pay, before Income Tax is calculated, provided their employer has set up a payroll giving scheme with an approved agency. **How the tax relief works** Because the donation is deducted before tax, you automatically get relief at your highest marginal rate of Income Tax, with no need to claim anything back separately (unlike Gift Aid, where basic rate relief is added by the charity but higher/additional rate relief must be claimed via Self Assessment). **Worked example: basic rate taxpayer** Emma wants to donate £100 net to charity through Payroll Giving. Because it comes out of gross pay and she is a basic rate (20%) taxpayer, the actual cost to her take-home pay is only £80 -- the other £20 is tax she would otherwise have paid. **Worked example: higher rate taxpayer** James, a higher rate (40%) taxpayer, donates £100 through Payroll Giving. His take-home pay only falls by £60, because the £40 he would have paid in Income Tax on that £100 is never deducted in the first place. **Worked example: additional rate taxpayer** Sarah, an additional rate (45%) taxpayer, donates £100 through Payroll Giving. Her take-home pay falls by only £55. **Payroll Giving vs Gift Aid** With Gift Aid, you donate from your NET (after-tax) pay, and the charity reclaims basic rate tax (20%) from HMRC on top -- so a £80 net donation becomes £100 in the charity's hands. Higher and additional rate taxpayers must then separately claim the difference between their rate and basic rate through Self Assessment or by adjusting their tax code. Payroll Giving is simpler for higher earners because full relief happens automatically and immediately, with no need to remember to claim it on a tax return. **Employer involvement required** Unlike Gift Aid, which any individual taxpayer can use independently, Payroll Giving is only available if your employer has set up a scheme through an HMRC-approved Payroll Giving Agency, which then distributes the donations to your chosen charities (sometimes deducting a small administration fee, though some employers cover this themselves). **No cap on donations** There is no upper limit on how much you can donate through Payroll Giving, and some employers also offer matched giving, doubling the value of your donation to the charity.