Payroll giving calculator, 2026/27

How this is calculated

Payroll giving donations are deducted from gross salary before income tax is calculated, so the calculator compares tax due on the full salary against tax due once the annual donation is deducted, using the 2026/27 bands of 20% basic rate, 40% higher rate and 45% additional rate. The difference between the two tax figures is the relief the donor receives automatically, without needing to complete a Self Assessment claim.

Because relief is given at the marginal rate, a higher rate taxpayer effectively gets £40 of relief for every £100 donated, while a basic rate taxpayer gets £20, which is reflected in the effective relief rate shown above.

Payroll giving versus Gift Aid

Under Gift Aid, the charity claims basic rate relief directly from HMRC and higher or additional rate taxpayers must claim the extra relief themselves through Self Assessment. Under payroll giving, the full marginal rate relief happens automatically at the point of deduction, which is simpler for higher rate taxpayers and avoids the need for an annual tax return adjustment for this donation.

Employers must be registered with an HMRC-approved Payroll Giving Agency to operate the scheme, and the agency typically deducts a small administration fee before passing the donation to the chosen charity, which is a cost worth checking against Gift Aid for larger regular donations.

Setting this up as an employer

Offering payroll giving is straightforward through most payroll software once registered with an approved agency, and some employers choose to match employee donations as part of a wider corporate social responsibility programme, which is treated as a separate business expense rather than part of the payroll giving deduction itself.

Does payroll giving reduce my National Insurance?

No. Payroll giving reduces the salary subject to income tax, but National Insurance is calculated on gross pay before the donation is deducted, so there is no NI saving from this type of giving.

Is payroll giving relief automatic?

Yes, relief is applied automatically through the payroll each pay period at the donor's marginal tax rate, with no need to claim anything separately on a Self Assessment return for these donations.

Can a company match employee payroll giving donations?

Yes, many employers choose to match donations as a separate contribution, which is usually treated as an allowable business expense for corporation tax purposes, subject to normal wholly and exclusively rules.

Is payroll giving better than Gift Aid for higher earners?

It can be, because higher and additional rate relief is given immediately through payroll rather than needing to be claimed back via Self Assessment, which simplifies things, though small agency fees may apply.