Payroll Giving vs. Give As You Earn

Polymath

Being subject to 40% tax, is there any difference, for me or for the charity, if I choose to give to them via payroll giving as opposed to Give As You Earn?

In each circumstance, am I correct to assume:
a) I can get tax relief from HMRC at 40% on the contribution?
b) the charity can claim Gift Aid on my contribution?

Thanks!

Penny_T

Hi Polymath,

Payroll Giving and Give As You Earn are the same scheme - the latter is justa branded name created by Charities Aid Foundation who are one of the biggest Payroll Giving Agencies athat administers the scheme.

You are correct to assume that you would receive full tax relief on any gift given through Payroll Giving; the deduction is taken from your gross pay beforeyou are taxed so the amount of tax you pay is adjusted accordingly, i.e. the money you would have paid in tax is given to the charity as well. For example,if you £10 per month £10 is deducted from your gross pay and the amount of taxyou pay will reduce by £4, so the different from your net salary will be £6.

The charity unfortunately can't claim Gift Aid on your donation as you have already gained tax relief on the contribution, however as you are a higher rate tax payer Payroll Giving is the most cost effective way to give as Gift Aid can only be claimed back at the standard rate of tax and the process can be costly for charities to complete, you would then have to include the donation on your tax return to receive the extra tax relief. For more info try hands-on-helping.co.uk


Hope this helps!

Penny

Polymath

Thanks, Penny - exactly what I wanted!

Poly