Should you Give as you Earn when donating to Charity?

Last Updated on 14 November 2022 by Dan

Hello everyone! In today’s climate, it’s a challenging environment for Charity, many of which do such vital and important work. Today I want to talk about Give as you Earn (GAYE) – an option which isn’t perhaps as well publicised as other options like the well-known Gift Aid but can make a huge difference.

Not everyone can do it as it requires the co-operation of your company payroll department – but if you can it’s well worth it (or approaching your company about signing up).

We’re believers here in the concept of “effective altruism” – that it’s good to give but you want to make sure that the benefits of your donation go as far as possible.

There’s something rather nice and makes your heart glow about giving some cash to the volunteer in the street shaking the collection tin, but as the Government essentially allows tax write-off on charitable donations (and this needs to be registered) it’s not always the most effective way to give.

What is Give as you Earn?

It’s a system run by the Charities Aid Foundation where you agree to make a regular contribution to a charity of your choice. Your company payroll department takes whatever you’re looking to contribute to the charity as a salary sacrifice, and pays it directly.

This provides benefits to both sides. For the charity, they’re getting a regular income stream from your donations, they get the full benefit straight away and they gain the maximum benefit the Government gives them through tax allowances.

For you, the salary sacrifice element means you’re effectively never paid the amount that you have given to the charity instead, so make a saving on the income tax you would have paid. That’s a good incentive at any income levels, but if you happen to be in one of the higher income tax bands this can make a huge difference to yourself and the charity.

You also don’t have to record and list out your transactions on your self-assessment tax return at the end of the year, as you do to get the benefit from Gift Aid.

There is a small administration charge taken by the payroll scheme administrator which does not go to the charity.

Can I pick any charity with Give as you Earn?

Provided they’re officially registered! When setting yourself up with the Give as you Earn scheme you’ll be asked to provide their official registered Charity Number, which you should always be able to find easily on that Charities website.

In the case of some of the larger charities, you may be able to pick these from a dropdown on the Give as you Earn registration website as well.

Do I need anything else to register for Give as you Earn?

You’ll need to provide basic details on your company – largely just their name and address and your employee number so they can make the appropriate payroll adjustment.

For avoidance of doubt, you cannot use the Give as you Earn scheme unless your firm has signed up for it so you need to check on this first.

What if my company doesn’t offer Give as you Earn?

Then definitely Gift Aid – when making any donation direct to a charity online, you should be presented with an option to do this which will also give both you and the charity the tax benefit.

You’ll need to make sure you supply your own personal details, and there are conditions that you’ve not receiving any benefit-in-kind in exchange for the money donated.

It does not cost you anything extra to donate this way, but the charity will receive a benefit! You need to keep a record of your giving so you can declare it as part of your income tax self-assessment and claim tax relief.

A personal note on charitable giving

If you’d like to give but don’t have a particular personal charity, I’d just like to encourage you to give to the Cystic Fibrosis Trust. It’s a disease that makes breathing very difficult as the body goes into mucus production overdrive, and sadly results in a greatly reduced lifespan for sufferers. You can read more about the charity on their website here.

I have a cousin who affected by this and I can attest that the charity has been excellent in supporting her. If you do donate, please let me know via the Contact Us form so I can personally thank you.

Any questions?

If you have any questions on the Give as you Earn scheme or already make donations on a regular basis we’d love to hear about it – just leave a comment below!

And that’s it!

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