Charity Give as You Earn (GAYE) Schemes - Setting Up a Payroll Giving

A simple guide to Give as You Earn (GAYE) - what is payroll giving, the benefits, how to find a company and agency, and set up a payroll giving scheme

Charity Give as You Earn (GAYE) Schemes - Setting Up a Payroll Giving

A simple guide to charity Give as You Earn (GAYE) schemes - what is payroll giving, the benefits, how to find a company and agency, and set up a payroll giving scheme.

Since 2015/16, the amount donated through Payroll Giving schemes has fallen by 15%, so there's scope to grow that again and in the tax year ending 2022 £128 million was donated, so the funding secured can be significant.  And there's scope to grow your relationship with the company and also to engage employees in other ways.

What is a GAYE Payroll Scheme?

Payroll Giving, also known as Give as You Earn, is a scheme that allows employees to make donations to UK charities directly from their pay before tax but after National Insurance contributions. This method of giving is both tax-efficient for employees and beneficial for charities.

GAYE Payroll Giving Schemes - a Missed Opportunity

CAF's Payroll Giving Report 2024, found that only about 4,000 organisations currently provide this benefit, but there are 45,000+ UK employers that could offer it. There are also currently 30 million people on PAYE who could be eligible to give through Payroll Giving.

It found that 59% of people have not heard of Payroll Giving, with greatest opportunity among millennials who increasingly want to work for a company with a social purpose. Younger employees are the most likely to say they would use a Payroll Giving scheme (36% of 16–34-year-olds).  The report suggests ways to encourage take-up, including making it easy to opt in and out, and matching donations.

Public Sector GAYE #LoveYourSmalls

Our research showed that the Government cut £1 billion from charity funding in 2023 causing huge damage and, with the Resolution Foundation prediction of a further £12 billion hole in the public finances, the situation may get even worse, not better.  However, there are more than o.5 million civil servants and payroll giving is almost cost free for employers. We argue that.

  • Government should have a policy of ensuring departments, agencies, NDPB and local government offer payroll giving and should actively promote it across all of them to encourage take-up.
  • The policy should be for staff to nominate their own local charities not having as single, or limited number of the usual large charities.

That probably won't happen, so we suggest local charity groups and infrastructure bodies consider lobbying their local councils, NHS or government bodies based locally to adopt payroll giving.

How Do I Find a GAYE Payroll Giving Company?

Register, then login to Charity Excellence, then open its Help Finder directory.  Run a search for payroll giving in its Key Word search for a list of companies.  It can also find companies that donate to charity, offer charity of the year, charity partnerships, match funding and raffle prizes.

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GAYE Scheme Benefits to a Company

Implementing a Payroll Giving scheme is a great way for a company to:

  • Champion the causes it's passionate about.
  • Doing so enhances a company’s corporate social responsibility profile.
  • It demonstrates commitment to charitable causes and can boost employee morale and engagement by supporting their philanthropic interests.
  • It's also  cost-effective and flexible, and any matching payments or costs can be offset against profits, thereby reducing Corporation Tax.
  • Employers can choose to match donations in full, in part, or include a monthly matching cap to suit all budgets.
  • Additionally, it can improve a company’s reputation and potentially attract positive attention and talent.

How Do I Set Up a GAYE Scheme?

To set up Payroll Giving, a company needs to partner with a recognised Payroll Giving agency. The agency will handle the donations and distribute them to the chosen charities. The process involves making deductions each payroll cycle and sending them to the agency.

How Do We Find a GAYE Agency?

Here's a list of payroll giving agencies approved by HMRC.

How Do We Maximise the Charity Benefits of GAYE?

To maximise the benefits of your charity GAYE scheme:

  • Promote Awareness: Effectively communicate the scheme’s benefits to potential donors.
  • Keep it Simple: Ensure the donation process is straightforward for donors.
  • Engage Your Company: Build a strong ongoing relationship with them by demonstrating the benefits you are delivering for them through payroll giving.
  • Recognise Donors: Acknowledge and thank donors to encourage continued support.
  • Monitor and Report: Keep track of donations and report on the impact they have made.

GAYE Scheme - Tax Benefits

The primary tax benefit of a payroll giving scheme is that donations are deducted from employees’ gross pay, meaning before tax is applied. This allows employees to give more while paying less, as they receive immediate tax relief at their highest rate of tax.  There is sometimes confusion with Gift Aid which allows charities to reclaim the basic rate tax already paid on donations by UK taxpayers, increasing the value of the donation at no extra cost to the donor.  In essence, Payroll Giving benefits the donor with tax relief, while Gift Aid benefits the charity by boosting the donation amount.

Where Can I Find Out More About Payroll GAYE Schemes?

For all the nitty, gritty detail, read Chapter 4 below.

For good advice, facts and figures read this CAF report.

And for fundraisers:

Find Far More Funding & Free Support

A registered charity ourselves, the CEF works for any non profit, not just charities.

Plus, 100+downloadable funder lists, 40+ policies, 8 online health checks and the huge resource base.

Quick, simple and very effective.

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To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words.  Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.

This Article on GAYE Schemes Is Not Professional Advice

This article on charity Give as you Earn (GAYE) payroll giving schemes is for general interest only and does not constitute professional legal or financial advice.  I'm neither a lawyer, nor an accountant, so not able to provide this, and I cannot write guidance that covers every charity or eventuality.  I have included links to relevant regulatory guidance, which you must check to ensure that whatever you create reflects correctly your charity’s needs and your obligations.  In using this resource, you accept that I have no responsibility whatsoever from any harm, loss or other detriment that may arise from your use of my work.  If you need professional advice, you must seek this from someone else. To do so, register, then login and use the Help Finder directory to find pro bono support. Everything is free.

Ethics note:  drafting this guide was partially informed using AI.

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