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Salary Sacrifice Charitable Donations: How to Give to Charity Every Pay Day
What Is Salary Sacrifice, and How Does It Work?
Salary sacrifice is an arrangement between an employee and their employer where a portion of the employee’s salary is exchanged for a non-cash benefit before tax is applied. This can be used for things like pension contributions, cycle-to-work schemes, or electric vehicle leasing.
But what about charity? Can salary sacrifice be used for charitable giving? The short answer is no – Payroll Giving, a different form of pre-tax donation, is the route employees need to take if they want to support charities straight from their pay before tax.
Why Payroll Giving Is the Best Way to Give
While salary sacrifice cannot be used for charity donations, Payroll Giving offers an equivalent way to donate that maximises tax efficiency. Through Payroll Giving, donations come straight from your salary before income tax is applied, meaning you give more at no extra cost to you. For example, a £10 donation would only cost a basic-rate taxpayer £8, with the government covering the rest.
This is a significant benefit when looking at the broader picture of charitable giving in the UK. Reports suggest that charitable donations are under increasing strain, with fewer people donating despite charities facing rising demand. Payroll Giving ensures consistent, reliable income for charities, helping them plan long-term support.
The Role of Employers in Supporting Charitable Giving
Employers who offer Payroll Giving are not just enabling tax-efficient donations but they are also fostering a giving culture within the workplace. Research has shown that employees are increasingly drawn to companies that align with their values. Providing Payroll Giving as a benefit can boost employee engagement, improve retention, and demonstrate corporate social responsibility in a tangible way.
Why GoodPAYE?
GoodPAYE makes Payroll Giving simple and effective. As a charity-owned organisation, we ensure that 100% of donations go directly to charities (minus the lowest processing fees in the market). Plus, we work with all UK charities, meaning employees can donate to any cause close to their heart.
