There is a quiet inefficiency sitting inside most UK payrolls. It costs nothing to fix, it improves your tax position and your employees', and it strengthens retention at the same time. Yet in the year to April 2024, use of it fell to its lowest level in nearly a decade.
It is Payroll Giving, and if you run finance or reward, it deserves a second look.
The mechanics finance people like
Payroll Giving lets employees donate to charity straight from gross salary, before income tax is applied. That single detail is what makes it more efficient than almost any other route.
Take a £10 monthly gift. Because it comes out before tax:
- A basic-rate (20%) employee pays £8.
- A higher-rate (40%) employee pays £6.
- An additional-rate (45%) employee pays £5.50.
The relief is immediate and it is complete. Compare that with Gift Aid, where a higher-rate taxpayer has to reclaim the extra relief themselves through a tax return, and many never do. With Payroll Giving, the full higher-rate benefit lands automatically, with no employee paperwork and no reclaim to chase. For your higher earners, it is simply the cleanest way to give.
So why is usage falling?
The efficiency has not changed. The participation has. Payroll Giving donations fell to £125m in the year to April 2024, the lowest in nearly a decade, and the number of participating employees has slid from 591,000 in 2020/21 to 516,000 in 2022/23 (HMRC).
Set that against the roughly 30 million UK employees on PAYE who could be giving this way, and you are looking at one of the most under-used tax-efficient schemes in the country. The barrier is not cost or complexity for the business. It is that most employees have never been offered it in a way that is easy to say yes to.
The part that reaches the P&L
The reason this matters beyond corporate social responsibility is talent economics.
- Companies that align business practices with purpose report 22% higher pre-tax profit (CECP, Giving in Numbers 2025).
- New employees who take part in purpose programmes show 52% lower turnover (Benevity).
- A single day of volunteering has been shown to cut staff turnover by half over the following year (Management Science, 2024).
Turnover is one of the largest hidden costs on any finance leader's desk. A giving programme that people actually use, anchored by tax-efficient payroll giving, is one of the cheapest levers you have to reduce it. You are not adding a cost line. You are improving one.
What "easy to say yes to" looks like
Payroll Giving stalls when it is buried in a benefits PDF and requires a form. It works when it is visible, instant and part of a wider giving experience. In practice that means:
- One place where an employee can start giving in under five minutes, with no paper.
- The tax saving shown at the point of decision, so people see that £10 costs them £6.
- A pre-vetted list of charities, so nobody has to research or worry about where the money goes.
- Impact reported back, so the giving feels real and continues.
Done that way, payroll giving stops being a dusty scheme and becomes the tax-smart backbone of a giving programme your whole workforce can join.
The bottom line for finance
You already run the payroll. The infrastructure is there. Turning on tax-efficient giving, and presenting it well, gives your people the most efficient way to donate, improves engagement and retention, and adds a credible line to your ESG story, all without new spend. The only thing standing between you and that is the friction, and friction is fixable.
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Want the full picture? Our research report, The State of Corporate Giving 2026, breaks down why giving programmes exist everywhere but so few people join them, and what the best companies do differently. It is a short, data-led read for anyone who owns the numbers behind purpose. Download it here.
