Payroll Giving

Norwooder

Does anyone know if payroll giving reduces what HMRC defines as "relevant earnings" and "taxable income"?

Let's say my gross pay is £12,000 per annum and I give £100 a month to a charity through payroll giving. On my P60 "pay" is stated as £11,000 for the year. I have no other sources of taxable income.

Are my relevant earnings and taxable income £11,000, or £12,000?

Dazed_and_confused

Why would it be £11,000 not £10,800???

Norwooder

Because I didn't proof read my post!

Dazed_and_confused

Does this help?

It looks like your taxable pay will be £10,800 not £12,000

https://www.gov.uk/donating-to-charity/donating-straight-from-your-wages-or-pension

Norwooder

That page describes the act of payroll giving in similar language to employee pension deductions through a net pay arrangement. My understanding is that deductions via net pay do not reduce your relevant earnings or taxable income.

Norwooder

You are right (pg 13)

https://www.tax.org.uk/sites/default/files/180704%20Review%20of%20Charitable%20Tax%20Reliefs%20-%20CIOT%20comments%20FINAL.pdf

This gives a curious preference to GAYE vs one off donations with gift aid, in that of the two approaches to charitable giving, only GAYE allows adjusted income and threshold income to be reduced (and potentially kept below a level where the annual allowance would begin to be tapered off).