Tax & Charity Guide -- Updated July 2026
Payroll Giving (Give As You Earn) Guide 2026/27
Payroll Giving, also known as Give As You Earn (GAYE), lets employees donate to charity straight from their gross salary before tax is deducted -- so relief is automatic and instant at their marginal rate, with none of the self-assessment claims that higher and additional-rate taxpayers need for Gift Aid. This guide explains how it works, what it costs a donor at each tax band, how employers set up a scheme, and how it stacks up against Gift Aid in 2026/27.
How Payroll Giving Works
If your employer runs an approved Payroll Giving scheme, you choose an amount to donate each pay period and it is deducted from your gross pay -- before Income Tax is calculated -- through an approved Payroll Giving Agency, which passes the money to your chosen charity or charities.
Because the donation reduces your taxable pay, you get relief immediately at your marginal rate of Income Tax, with no separate claim to make. National Insurance is still calculated on your full gross pay, so Payroll Giving does not reduce your NI bill -- only your Income Tax.
What a Donation Actually Costs You
Because relief is instant and matches your own rate, a £10 pledge costs different amounts depending on your Income Tax band in 2026/27:
- Basic rate (20%): a £10 donation costs you £8.00 net.
- Higher rate (40%): a £10 donation costs you £6.00 net.
- Additional rate (45%): a £10 donation costs you £5.50 net.
Unlike Gift Aid, higher and additional-rate taxpayers do not need to claim anything back through Self Assessment -- the full relief is already reflected in your take-home pay.
Setting Up a Scheme as an Employer
To offer Payroll Giving, an employer signs up with an HMRC-approved Payroll Giving Agency, which handles distributing donations to charities and issuing receipts. The employer then deducts nominated amounts from gross pay through its payroll software and forwards the total to the agency, which may deduct a small administration fee before passing funds on (some employers cover this fee themselves).
There is no limit on how much an employee can donate, and donations can be split between multiple registered charities. Many employers also operate matched giving, topping up employee donations pound for pound as a benefit.
Payroll Giving vs Gift Aid
| Feature | Payroll Giving | Gift Aid |
|---|---|---|
| Relief timing | Instant, via payroll | Charity claims basic rate; you claim the rest later |
| Who can use it | Only if your employer runs a scheme | Anyone who pays enough UK tax |
| Self Assessment needed? | No | Yes, for higher/additional-rate relief |
| Self-employed? | Not available | Available |
The two schemes are not mutually exclusive across a household or a lifetime -- you simply use whichever route is available and most convenient for each donation.