How to set up payroll giving: a step-by-step guide for UK employers (2026)

15 September 2026 8 min read GivingForce

To set up payroll giving, a UK employer signs a contract with an HMRC-approved Payroll Giving Agency, deducts each employee's chosen donation before income tax is worked out, and sends the total to the agency every month with the PAYE payment. The agency then passes the money to the charities employees picked.

That is the whole mechanism, and there is no separate HMRC registration for the employer. The latest HMRC figures, published on 1 July 2026, show £131 million given through payroll giving in the tax year to April 2025, up from £125 million the year before. The number of employees taking part fell over the same period, from 504,000 to 475,000.

So the scheme itself is simple and the money is growing, but fewer people are joining. This guide covers the setup steps, the rules employers must follow, what a donation costs an employee at each tax rate, and what makes more people sign up. GivingForce has built corporate giving technology since 2010, and the GivingForce Foundation is one of the 23 agencies on HMRC's approved list, so the last section explains how we run it too.

What is payroll giving?

Payroll giving lets employees donate to charity straight from their pay, before income tax is taken, so the tax relief arrives automatically at their own rate.

Payroll giving: a UK scheme, also called Give As You Earn, where charitable donations are deducted from gross pay under PAYE and paid to charities through an HMRC-approved agency.

HMRC's guidance sets out four points every employer should know:

The donation comes off pay before income tax, but National Insurance is still worked out on the full gross pay.
There is no limit on how much an employee can give.
Pensioners can give the same way from an occupational pension.
Donations must go to charities recognised by HMRC. Community amateur sports clubs cannot receive payroll giving.

Once the scheme is running, the donation happens every pay run without anyone having to remember it.

What does payroll giving cost employees?

A £10 donation costs a basic-rate taxpayer £8 and a higher-rate taxpayer £6, because the relief matches the income tax they would otherwise pay.

Taxpayer (England, Wales, Northern Ireland)	Income tax rate	Charity receives	Cost to the employee
Basic rate	20%	£10	£8.00
Higher rate	40%	£10	£6.00
Additional rate	45%	£10	£5.50

Scotland sets its own bands. For 2026 to 2027, Scottish rates are 19%, 20%, 21%, 42%, 45% and 48%, so the same £10 costs between £8.10 and £5.20. Because the deduction happens before tax, the relief follows whichever rate applies to the employee.

Any agency administration fee is usually taken from the donation, so the charity may receive slightly less than £10 unless the employer pays the fee.

Payroll giving, Gift Aid or a one-off donation?

Payroll giving and Gift Aid give similar tax value; the difference is who does the work and when a higher-rate taxpayer gets the extra relief.

	Payroll giving	Gift Aid	One-off donation without Gift Aid
When relief is given	At source, every pay run	Charity claims 25p per £1 afterwards	None
Paperwork for the employee	Agency sign-up form	A Gift Aid declaration for each charity	None
Higher-rate relief	Automatic	Claimed back through Self Assessment or a tax code change	None
Goes on the tax return	No	Yes, for higher-rate claims	No
Can be combined on the same gift	No	No	Not applicable

HMRC's Gift Aid rules exclude payroll giving donations, because the relief has already been given. So a charity cannot claim Gift Aid on money it receives from a Payroll Giving Agency.

For a basic-rate taxpayer the value to the charity ends up the same either way. For higher-rate taxpayers, payroll giving removes a step they would otherwise have to remember: HMRC's own example shows a 40% taxpayer who gives £100 through Gift Aid has to claim £25 back themselves.

How to set up payroll giving in seven steps

Whichever agency you choose, the sequence holds: pick an approved agency, sign its contract, add a payroll deduction, enrol staff and remit monthly.

1. Choose an HMRC-approved Payroll Giving Agency

You must work with an agency on HMRC's approved list, which named 23 agencies when it was last updated on 12 November 2025. Compare them on fees, how they vet charities, reporting, payroll integration and whether they also handle matching or volunteering.

2. Sign the agency contract

HMRC requires a written agreement between agency and employer that complies with the payroll giving regulations. The agency supplies the contract and the employee authorisation forms.

3. Decide who pays the fees and whether you will match

Agencies usually take a small fee from each donation. You can pay it instead. HMRC treats that cost as an allowable expense against your profits. Decide at the same time whether you will match employee donations, because both choices shape how you promote the scheme.

4. Set up the deduction in payroll

The donation comes off after National Insurance is calculated on gross pay, but before PAYE income tax. Many payroll packages include a payroll giving deduction setting, so check yours before launch.

5. Tell employees and enrol them

HMRC says employers must tell staff the scheme exists and give them the agency's forms. Choices can stay private. Employees may send them straight to the agency rather than telling you.

6. Send the deductions every month

Pay the total deducted to the agency each month, at the same time as your PAYE remittance. The agency must pass donations on within 35 days if it knows the employee and the charity and has paid that charity in the last 12 months. In every other case it has 60 days.

7. Keep the records

HMRC expects four sets of records: the agency contract, each employee's authorisation, the deductions made for each employee and the agency's receipts.

What the rules require of employers

The legal duties are short: an agency contract, correct deductions, monthly payment, telling staff and keeping four sets of records.

Rule	What it means in practice	HMRC reference
Use an approved agency	You cannot pay charities directly through payroll giving	Chapter 4, 4.2.2
Deduct before income tax	National Insurance is still calculated on gross pay	Chapter 4, 4.1.3
Tell employees	Share that the scheme exists and provide agency forms	Chapter 4, 4.3.3
Pay monthly	Send deductions with the PAYE remittance	Chapter 4, 4.3.3
Keep records	Contract, authorisations, deductions, receipts	Chapter 4, 4.3.5
Let people leave	An employee can stop by giving reasonable notice	Chapter 4

Offering the scheme is optional, but once you run it these duties apply every pay period.

Can you connect your payroll system directly to a giving platform?

Yes. Many providers accept either a regular payroll file or a direct API connection, so donations update each pay run.

A file-based connection works with almost any payroll system: you export the deductions and upload them. An API connection passes new sign-ups and changes across on its own, so nobody has to rekey them. Either way, pin down three things before you commit:

How long an employee's change takes to reach payroll.
Who reconciles what was deducted against what charities received.
Whether finance can follow the audit trail from payslip to charity.

How do you get more employees to join?

Participation rises when employees can see the scheme and the employer puts money behind it, by matching gifts or paying the fees.

The drop from 504,000 to 475,000 participants shows that setting up a scheme is not the same as filling it. Research published by the Charities Aid Foundation this month found that two-thirds of employees want their employer to give, so the demand is there.

The industry's own benchmark points at what works. The Payroll Giving Quality Mark, run by the Association of Payroll Giving Organisations, scores employers from Bronze to Diamond. Since 2024 it has given one point for each percentage point of participation, capped at 30, plus extra points for:

paying the agency's admin charges
matching donations
running promotional events
running digital promotions

On participation alone an employer can no longer rise above Gold, which tells you the scheme rewards active promotion. In practice that means launching with a clear campaign, showing new joiners the scheme at induction and reminding people at moments such as Christmas or a disaster appeal.

Running payroll giving across more than one country

The scheme above exists only in the UK. Other countries treat workplace donations differently, so a global employer needs local rules for each market.

In the UK the relief is given before tax. In the United States, the IRS says a charitable contribution is generally deductible only if the employee itemises deductions, and gifts of $250 or more need a written acknowledgement from the charity. For a multinational programme, check four things in each country:

Question	Why it matters
Is the donation pre-tax or post-tax?	It decides how you describe the benefit to staff
Who issues tax receipts?	Employees may need them for their own returns
Which charities qualify locally?	Eligibility rules differ by jurisdiction
Can one provider pay charities in local currency?	It avoids running a separate scheme per country

Setting up a scheme is not the same as filling it. The employers who win are the ones who keep putting it in front of people.

How GivingForce runs payroll giving

Our agency is the GivingForce Foundation, a registered charity that appears on HMRC's approved list.

That structure means the same organisation provides the employee platform and acts as the agency, so money moves from payslip to charity without a third party in the middle. In practice it looks like this:

Connect. API or file-based integration with your payroll system, including Workday, SAP SuccessFactors and Oracle Cloud HCM.
Configure. Set matching rules and charity preferences, and brand the employee portal.
Launch. Employees choose from more than 70,000 charities, each screened through our CauseCheck due diligence with anti-money laundering checks, sanctions screening and ongoing monitoring.
Report. Donations flow each pay run and any change applies from the next one. Finance gets one invoice a month. Every payment comes with a complete audit trail and full reconciliation.

We help employers work towards the Payroll Giving Quality Mark at every level from Bronze to Diamond. More than £500 million has now been donated through the GivingForce Foundation. That spans 76 countries.

The tax relief is the easy part, because HMRC does that for you. The hard part is making the choice to give feel obvious to someone scrolling through their benefits on a Tuesday afternoon. That is where most schemes win or lose.

If you are planning a scheme, or your current one has stalled, you can book a 20-minute demo or read more on our payroll giving page. For the wider picture of why programmes stall, see why nobody uses your giving programme and the most tax-efficient way to give.

Frequently asked questions

Does an employer need to register with HMRC to offer payroll giving?

No. There is no separate employer registration. You sign a contract with an HMRC-approved Payroll Giving Agency and run the deductions through PAYE.

Can employees claim Gift Aid on payroll giving donations?

No. Payroll giving donations already get tax relief at source, so HMRC's Gift Aid rules exclude them, and employees should not put them on a tax return.

How long does the agency take to pay the charity?

Within 35 days if the agency knows the employee and the charity and has paid that charity in the past year, and within 60 days in all other cases.

Can employees change or stop their donation?

Yes. HMRC guidance lets an employee leave the scheme at any time by giving their employer reasonable notice. Many platforms also let people change the amount or charity online.

Who pays the agency's administration fee?

It is usually deducted from each donation. An employer can choose to pay it instead, and HMRC allows that cost as a business expense.