Payroll Giving

Payroll Giving, also known as Give As You Earn, is a program that enables employees to donate to charitable organizations directly from their salary or pension before taxes. This initiative offers a straightforward way for workers to support their preferred charities regularly, ensuring their contributions deliver maximum impact due to the tax-efficient process.

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Understanding Payroll Giving

Payroll Giving is a seamless mechanism for making Charitable Donations. Its primary appeal lies in the pre-tax deduction, meaning donations are made before Income Tax is applied, allowing individuals to give more at a reduced cost to themselves. Participation requires your employer or pension provider to operate a Payroll Giving scheme.

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Tax Efficiency Explained

Donations through Payroll Giving are deducted from your gross salary. This means that the amount you donate will reduce your taxable income, effectively lowering the Income Tax you pay. The level of tax efficiency depends on your tax rate:

• Basic Rate Taxpayers (20%): Every £1 donation costs you only 80p.
• Higher Rate Taxpayers (40%): Every £1 donation costs you just 60p.
• Additional Rate Taxpayers (45%): Each £1 donation costs only 55p.

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How to Participate

To start contributing through Payroll Giving, check if your employer offers the scheme. If they do, you can sign up and select the amount you wish to donate each pay period. The donation will automatically be deducted from your salary by your employer and sent to your chosen charity.

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Benefits of Payroll Giving

• Effortless Donations: Once set up, contributions are automatically deducted, requiring no further action.
• Tax Benefits: Contributions are more tax-efficient, allowing you to donate more for less.
• Flexibility: You can choose how much you want to donate and can change or stop your contributions at any time.
• Wide Impact: Supports a broad range of charities, allowing you to contribute to causes you care about.

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Getting Started

If you're interested in Payroll Giving, talk to your HR department to see if your company is enrolled in a scheme. If they are not, you might suggest they consider setting one up. It's a straightforward process that benefits both employees and charities alike.

For detailed guidance and a list of participating charities, you can visit HMRC’s official website or consult with your employer's HR department.