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Income tax, National Insurance and net pay for any UK salary, 2026-27.
Under Give As You Earn, donating £1 to charity costs a basic-rate taxpayer 80p, a higher-rate taxpayer 60p and an additional-rate taxpayer 55p, because the gift leaves the payslip before Income Tax is calculated [1]. The scheme has been part of UK payroll since the government introduced it in 1987, and it now moves well over £100 million a year to charities entirely through employer pay runs [2].
Give As You Earn, usually shortened to GAYE, is the workplace name for Payroll Giving. It lets an employee support any HMRC-recognised charity with a regular gift taken straight from pay, and it hands the tax relief back immediately rather than through a later claim. The employer runs the scheme through an approved agency, and the whole arrangement can be set up in a handful of steps.
This guide explains how GAYE works, how an employee signs up and changes their giving, how an employer sets a scheme up and promotes it, exactly how much relief is given at each tax rate, and how employers earn formal recognition for the scheme they run. It is written for employers considering GAYE and for the payroll teams that will operate it.
Key takeaways
- Give As You Earn is the workplace name for Payroll Giving; gifts are taken after National Insurance but before Income Tax.
- Donating £1 costs 80p at the basic rate, 60p at the higher rate and 55p at the additional rate.
- An employee signs up through a form supplied by the employer's Payroll Giving agency and can change or stop giving at any time.
- An employer sets up GAYE by contracting with an HMRC-approved agency, then deducts and forwards donations each pay run.
- Employers can earn a Payroll Giving Quality Mark, from Bronze up to Diamond, based on take-up and support.
What Give As You Earn is
Give As You Earn is a way for an employee or pension recipient to donate to charity directly from pay, with Income Tax relief given at source through PAYE [3]. It is the same mechanism as Payroll Giving; GAYE is simply the brand most widely used to describe it in the workplace, and the two terms are interchangeable.
The gift is deducted after National Insurance has been worked out but before Income Tax, so the donation reduces taxable pay and the relief appears in the same payslip [1]. Because the money never becomes taxed income in the donor's hands, the charity has nothing to reclaim from HMRC and the higher-rate donor has nothing to chase [3].
The donor chooses the charity, and can support more than one through a single deduction, because the money is pooled and distributed by an approved agency rather than paid direct [4]. The only firm eligibility rule is that the donor must pay tax through PAYE, which is why GAYE suits employees and pensioners rather than the self-employed [1].
Where the name comes from
The label deliberately echoes Pay As You Earn, the system that collects Income Tax and National Insurance from wages. GAYE piggybacks on that same monthly machinery, which is what makes it painless for the donor: the gift comes out at the same time as tax and National Insurance, before the money is ever seen [3]. The Charities Aid Foundation launched its GAYE service when the scheme began, and the name has been the common shorthand for workplace giving ever since, applied across every approved agency's version of the scheme [5].
For an employer, that shared plumbing is the point. GAYE reuses the deduction, the tax calculation and the Real Time Information report the payroll already produces, so a scheme adds a line to the pay run rather than a separate process [6]. Modern UK payroll software applies the deduction in the correct order automatically, which keeps the National Insurance figure right and the reporting clean.
How much relief the donor gets
Relief is given at the donor's highest marginal rate, because the gift is removed from pay before the tax calculation. HMRC states the cost per £1 donated directly, which makes the effect easy to see [1]. The table below sets out the cost of donating £1 for taxpayers in England, Wales and Northern Ireland at the 2026-27 rates.
| Taxpayer rate | Income Tax rate | Cost of donating £1 |
|---|---|---|
| Basic rate | 20% | 80p |
| Higher rate | 40% | 60p |
| Additional rate | 45% | 55p |
The relief for Scottish taxpayers follows the separate Scottish Income Tax bands, so the cost of a £1 gift differs at every rate [7]. The next table shows the Scottish figures, again as the cost of donating £1.
| Scottish taxpayer rate | Cost of donating £1 |
|---|---|
| Starter rate | 81p |
| Basic rate | 80p |
| Intermediate rate | 79p |
| Higher rate | 58p |
| Top rate | 52p |
The practical consequence is that the more tax a donor pays, the less a given gift costs them, and the charity still receives the full pledged amount less any agency fee [3]. A Scottish top-rate donor pledging £20 a month sees it cost only £10.40, while the charity receives the full £20 [7].
The National Insurance point
One detail is worth stating plainly, because it is often misread. GAYE reduces the pay on which Income Tax is charged, but National Insurance is still calculated on the full gross pay before the donation comes out [3]. The relief is therefore equal to the donor's Income Tax rate, and no more.
This separates GAYE from salary-sacrifice arrangements, which reduce both tax and National Insurance [8]. The sequencing has to be exact: the donation sits after the National Insurance calculation and before the tax calculation, and getting it wrong would misstate both the contributions and the Real Time Information report filed with HMRC [9].
How an employee signs up
Signing up is deliberately light. Once an employer runs a scheme, the employee completes a short pledge form supplied by the employer's chosen Payroll Giving agency, naming the charity or charities to support and the amount to give each pay period [5]. Many agencies provide an online form, so the whole sign-up can happen in a few minutes without paper.
From there the employer takes over the mechanics. The pledged amount is deducted each pay run, sent to the agency, and forwarded to the named charities, with no further action needed from the employee [3]. The donor can increase, decrease, redirect or stop the gift at any time, simply by telling the employer or agency, because the pledge is a voluntary instruction rather than a fixed contract [10].
What the employee needs to decide
The two choices a donor makes are which cause to support and how much to give. There is no statutory minimum or maximum on a GAYE donation, so the amount is entirely a matter for the donor, and it can be a fixed sum each month or adjusted as circumstances change [3]. Donors can also spread a single deduction across several charities, which is one of the features that distinguishes GAYE from a direct debit to one organisation [10].
An employee who wants to see the exact effect on take-home pay before pledging can model different amounts, since the deduction changes only the Income Tax line, not the National Insurance line [1]. For a business that also produces occasional one-off payslips, an instant payslip generator covers ad-hoc pay, but a standing GAYE pledge belongs in a continuous payroll with an agency behind it.
How an employer sets up a scheme
An employer cannot operate GAYE alone; it must contract with an HMRC-approved Payroll Giving agency, which becomes the body that receives and distributes the donations [4]. Setting up is straightforward and reuses the existing payroll, and it can be broken into a short sequence.
The steps below capture what setting up and running a scheme involves in practice.
| Step | What the employer does |
|---|---|
| 1 | Choose an HMRC-approved Payroll Giving agency and sign its agreement |
| 2 | Tell employees the scheme exists and share the agency's pledge form |
| 3 | Set up the deduction in the payroll, taken after NI and before tax |
| 4 | Each pay run, deduct pledges and send the total to the agency |
| 5 | Report the deduction through Real Time Information as normal |
The deduction flows through the ordinary Real Time Information Full Payment Submission, because it affects the Income Tax figure, and an HMRC Recognised payroll engine files that submission on or before payday [9]. The agency may charge an administration fee, usually taken from donations before they reach the charity, though the employer can choose to meet the fee so the charity keeps the whole gift [3].
The cost to the business
Running GAYE costs an employer very little. The main input is the administrative time to operate the deduction, and any agency fee the employer chooses to absorb, both of which can be set against business profits before Corporation Tax [3]. There is no statutory duty to offer GAYE, so it sits alongside genuinely voluntary benefits rather than compliance obligations such as auto-enrolment [2].
For an accountancy practice or bureau running payroll for many employers, adding GAYE to each client scheme is a repeatable task rather than a bespoke project, and payroll bureau software that applies the deduction consistently across every client removes most of the per-scheme effort. The same deduction logic that serves a single small business payroll can serve a large multi-site employer without change.
Employer engagement and recognition
GAYE is often run as more than a payroll line. Employers can boost participation by matching employee donations, in full, in part or up to a monthly cap, and by promoting the scheme through staff events and internal campaigns [10]. Matching is the clearest signal of employer commitment, because it directly increases the amount reaching charities.
Formal recognition exists through the Payroll Giving Quality Mark, run by the Association of Payroll Giving Organisations, which grades employers on take-up and the support they provide [11]. The Quality Mark has five tiers, and the level awarded rises with the proportion of staff giving and the extra steps the employer takes.
| Quality Mark level | What it broadly recognises |
|---|---|
| Bronze | A scheme in place with entry-level participation |
| Silver | Higher take-up across the workforce |
| Gold | Strong participation, often with active promotion |
| Platinum | High participation plus employer matching or fee-paying |
| Diamond | The highest sustained participation and support |
Recognition is not the reason to run GAYE, but it gives employers a visible marker of a scheme that works, and it tends to follow naturally where the employer matches donations and promotes the scheme rather than leaving it dormant [5]. The mechanics underneath never change: the deduction is taken before tax, routed through the agency, and reported through PAYE [3].
Work out the effect on take-home pay
Because a Give As You Earn deduction changes only the Income Tax figure, an employee can see the exact effect on net pay with the Moonworkers UK salary calculator, which applies the 2026-27 PAYE and National Insurance rules to any gross salary.
£ per month
e.g. 1257L, S1257L, BR, D0
S = Scotland · C = Wales · W1/M1 = non-cumulative
Enter a salary or hourly rate above
About this calculator
This calculator gives you a close estimate of your UK payroll deductions for 2026-27, using HMRC's exact percentage method with periodised thresholds. It handles the three tax territories, K codes with the 50% regulatory limit and its carry-forward, weeks 53, 54 and 56, the cumulative and W1/M1/X bases, student and postgraduate loans, and pension contributions on qualifying earnings. It still won't match your payslip to the penny in every case: it does not cover in-year tax code changes, payrolled benefits in kind, NI deferral across more than one employment, directors on the annual earnings period, or employer-level annual adjustments such as the Employment Allowance and the apprenticeship levy. Powered by the same engine as the Moonworkers Payroll API.
Frequently asked questions
Why might the result differ from my payslip?
This calculator uses your current gross pay and tax code to produce an estimate. K-code carry-forwards and weeks 53, 54 and 56 are handled, and the Year-to-date section reproduces a specific period exactly. What your employer may apply that this does not: a mid-year tax code change, benefits in kind processed through payroll, or NI deferral across more than one employment. For most employees on a standard tax code the difference is negligible.
What tax code should I enter?
Use the tax code shown on your most recent payslip or the PAYE Coding Notice (P2) from HMRC. If you're not sure, 1257L is the standard code for most employees resident in England, Wales, or Northern Ireland. Use S1257L for Scotland or C1257L for Wales if you pay Scottish or Welsh income tax.
Which NI category applies to me?
Most employees use Category A. Use M if you are under 21, H if you are an apprentice under 25, or C if you are over State Pension age. Your employer is responsible for assigning the correct category — if in doubt, check your payslip.
Which student loan plan am I on?
Your plan depends on when and where you studied. Plan 1 covers students who started before September 2012. Plan 2 is for English and Welsh students who started from September 2012 to July 2023. Plan 5 applies to English students who started from August 2023. Plan 4 covers Scottish students. You can check your plan at gov.uk or on your payslip.
What is the YTD cumulative PAYE mode?
HMRC's standard method calculates income tax on your total earnings to date each period, then subtracts tax already paid. If you're mid-year and want to see exactly what tax should be deducted in a specific period, expand the Year-to-date section and enter your running totals from previous periods only.
Conclusion
Give As You Earn has lasted because its design is simple and its cost to everyone involved is low. It borrows the same monthly machinery that collects tax and National Insurance, delivers the relief at source, and asks the donor to do nothing after a one-off pledge. For the charity, it means predictable income with no reclaim to file; for the employer, a benefit that costs little and can be recognised formally.
As employers look for meaningful ways to support the causes their staff care about, a scheme that turns a small pre-tax deduction into an immediate, no-paperwork donation keeps its appeal. The organisations that get the most from GAYE are the ones that match, promote and measure it, rather than simply switching it on. Those interested in the wider mechanics can read how the underlying scheme is defined in the Moonworkers guide to what Payroll Giving is.
Frequently asked questions
Is Give As You Earn the same as Payroll Giving?
Yes. Give As You Earn is the workplace name for Payroll Giving, and the two terms describe the same scheme. Donations are taken from pay after National Insurance but before Income Tax, relief is given at source, and the money is routed through an HMRC-approved agency. The GAYE label simply became the common shorthand for the scheme in the workplace.
Can an employee change or stop their donation?
Yes, at any time. A Give As You Earn pledge is a voluntary instruction, not a fixed contract, so an employee can increase, reduce, redirect or cancel it by telling the employer or the Payroll Giving agency. The change takes effect from the next pay run once the payroll is updated, and no reason has to be given.
Does the employer have to match donations?
No. Matching is entirely optional. Some employers match employee donations in full, some match up to a monthly cap, and many do not match at all. Matching increases the amount reaching charities and counts towards a higher Payroll Giving Quality Mark, but a scheme runs perfectly well without it.
How much can an employee give through Give As You Earn?
There is no statutory minimum or maximum set by HMRC, so the amount is a matter for the donor. An employee can give a small fixed sum each pay period or a larger amount, split it across several charities, and adjust it whenever they wish. The relief always matches the donor's Income Tax rate on the amount given.
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