What is GAYE?

Give As You Earn – GAYE – is a scheme that allows employees to make donations to charity directly from their wages as the payroll is run. For this reason, GAYE is also known as ‘payroll giving’.

GAYE is a popular way to make charitable donations because the money goes directly to the charity or charities in question and the employee receives tax relief on their donation, as it is deducted from their wages before it is taxed.

How does payroll giving work?

The donations are subtracted from the employee’s salary and paid directly to an HMRC approved agency which is then responsible for ensuring the money reaches the nominated charity.

Employers will need to sign a contract with the Payroll Giving Agency setting out the identity of employees making donations and timetable of when payments will be made. Typically the monies collected much reach the nominated end-recipient charity within 35 or 60 days of the donation being made.

With the agreement in place, the employer must ensure that GAYE is applied to the wages of all employees who have elected to become part of such a scheme. It is important that deductions are made at the correct point of the payroll calculation process.

Charitable donations must be made after National Insurance has been deducted, but before income tax is applied. The extracted money is then sent to the nominated Agency at the same time each month as PAYE data is sent to HMRC.

GAYE is relatively easy to administer once set-up, but many employers may find it beneficial to seek advice from their accountant about setting up the necessary agreements first.