Payroll Giving Policy Template — Free UK Example

Most UK employers who run Payroll Giving do so without ever writing the policy down. It works, more or less, until someone in finance leaves, an auditor asks how donations are reconciled, or an employee queries why their deduction didn’t appear on a payslip. At that point a written policy stops being bureaucracy and starts being useful.

This article gives you a free payroll giving policy template you can adapt, plus the reasoning behind each clause. It’s aimed at HR, payroll and finance leads in UK organisations of any size, including SMBs setting up a scheme for the first time. If you’re still deciding whether to offer Payroll Giving at all, start with how payroll giving works and come back here once you’ve picked an agency.

Why bother with a written policy?

Three reasons, in roughly this order of importance:

1. Consistency. Without a written rule, the answer to “can I donate £400 this month?” depends on who’s on the payroll desk that day.
2. Audit trail. HMRC expects you to operate Payroll Giving correctly under PAYE rules. Charity Commission scrutiny can also reach employers who publicly link themselves to specific charities. A policy demonstrates due process.
3. Employee trust. People are giving you money to pass on to a charity. Telling them, in writing, exactly how that works is the bare minimum.

A good policy also makes it easier to layer on related programmes later — matched giving, charity of the year, and employee volunteering — without rewriting everything.

The non-negotiables before you draft anything

You can’t write a coherent policy until you’ve made four decisions:

• Which Payroll Giving Agency you’ll use. HMRC maintains a list of approved agencies (sometimes called PGAs). The agency handles the distribution to charities and charges a small admin fee — usually 2–4% or a flat 25p per donation. Some employers absorb this fee; others let it come out of the donation.
• Whether you’ll match donations, and if so, up to what limit and on what terms.
• Who administers the scheme internally — usually payroll, sometimes shared with HR or a CSR lead.
• How employees enrol — paper form, agency portal, or via your HRIS.

Get these four nailed down. Everything else in the template flows from them.

The payroll giving policy template

Copy, paste, and edit. Square brackets mark the bits you need to fill in. Treat this as a starting point, not legal advice — run the final version past your own legal or compliance function before publishing.

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[Company Name] Payroll Giving Policy

Effective date: [date] Owner: [Head of HR / Head of Payroll] Review cycle: Annual

1. Purpose

[Company Name] operates a Payroll Giving scheme to enable employees to donate to UK charities directly from their gross pay, receiving immediate tax relief at their marginal rate. This policy sets out how the scheme operates, who is eligible, and the responsibilities of the Company and participating employees.

2. Scope

This policy applies to all UK employees of [Company Name] paid through PAYE, including full-time, part-time and fixed-term staff. It does not apply to contractors, consultants, or workers paid via self-assessment. Pension recipients drawing a company pension through PAYE are eligible where operationally feasible.

3. How the scheme works

Donations are deducted from gross pay before income tax is calculated, in line with HMRC Payroll Giving rules. The Company forwards deductions to [Payroll Giving Agency name], an HMRC-approved Payroll Giving Agency, which distributes the funds to the employee’s chosen UK-registered charity or charities.

Because donations come from pre-tax income, the effective cost to a basic-rate taxpayer of a £10 donation is £8; for a higher-rate taxpayer it is £6; and for an additional-rate taxpayer it is £5.50. National Insurance is still calculated on the full gross pay.

For more on the mechanics, see the broader explainer on payroll giving tax relief.

4. Eligibility and enrolment

Any employee on UK PAYE may join the scheme at any time. To enrol, employees must:

• Complete the enrolment form provided by [Payroll Giving Agency name], either online via [portal URL] or on paper from [contact].
• Specify the charity or charities to receive donations and the monthly amount per charity.
• Submit the form to [payroll inbox] by the [Xth] of the month for the deduction to start in the following payroll cycle.

Employees may donate to any charity registered with the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator (OSCR), or the Charity Commission for Northern Ireland. Donations to organisations that are not registered UK charities are not permitted under Payroll Giving rules.

5. Donation amounts

There is no minimum or maximum donation set by HMRC. The Company applies the following internal limits for administrative reasons:

• Minimum: £1 per month per charity.
• Maximum: Up to gross taxable pay, subject to leaving sufficient pay to meet statutory deductions, pension contributions, attachment of earnings orders, and any other prior obligations.

Where a deduction would breach these limits in a given pay period, payroll will contact the employee and the deduction will be paused until resolved.

6. Matched giving

[Choose one of the following clauses, or delete this section entirely if not offering matched giving.]

Option A — No matching. [Company Name] does not currently match employee payroll donations. This may be reviewed annually.

Option B — Capped match. [Company Name] will match employee payroll donations pound-for-pound up to a maximum of £[X] per employee per month. Matched contributions are paid by the Company directly to [Payroll Giving Agency name] and are passed to the same charity or charities nominated by the employee. Matching applies only to active employees; it ceases on the date employment ends.

Option C — Tiered match. [Company Name] matches employee payroll donations as follows:

• 100% of the first £[X] per month
• 50% of the next £[Y] per month
• No match above this level

For wider context on structuring this, see our guide to matched giving programme design.

7. Administration fees

The Payroll Giving Agency charges an administration fee of [X]% / [X]p per donation. [Company Name] [will absorb this fee on behalf of employees / will deduct this fee from the donation before it is passed to the charity]. This is reviewed annually as part of the scheme’s renewal.

8. Payslip and reporting

Each payroll giving deduction will appear as a separate line on the employee’s payslip, labelled “Payroll Giving” or similar. Employees can request an annual statement from [Payroll Giving Agency name] showing total donations made through the scheme.

The Company will not publish individual donation amounts or charity choices internally without the employee’s explicit consent, in line with our data protection obligations.

9. Changing or stopping donations

Employees may amend the amount, change the recipient charity, or stop donations at any time by:

• Updating their preferences via [Payroll Giving Agency name]‘s portal, or
• Submitting a written request to [payroll inbox].

Requests received by the [Xth] of the month will take effect in the following payroll cycle. There is no notice period and no penalty for stopping or reducing donations.

10. Leavers

Payroll giving deductions stop automatically with the employee’s final payroll run. The final deduction will be forwarded to the Payroll Giving Agency in the normal cycle. Outstanding employer matched contributions, if any, will be paid in line with the leaver’s final payroll.

The scheme is not portable between employers. Departing employees who wish to continue giving from pay must enrol with their new employer, if a scheme is offered.

11. Roles and responsibilities

Party	Responsibility
Employee	Choosing charity/charities; setting amount; keeping details current; informing payroll of changes
Payroll	Processing deductions accurately; remitting to PGA on time; maintaining records for at least 3 years
HR	Promoting the scheme; onboarding inductions; handling enquiries
Finance	Reconciling deductions, employer matching and admin fees
Payroll Giving Agency	Distributing funds to charities; providing employee statements; HMRC reporting
Charity	Acknowledging donations directly to donors where requested

12. Record keeping

The Company will retain payroll giving records for a minimum of three years after the end of the tax year to which they relate, in line with HMRC PAYE record-keeping rules. Personal data is processed under our employee privacy notice and the UK GDPR.

13. Review

This policy is reviewed annually by [policy owner], or sooner if HMRC rules, the chosen Payroll Giving Agency, or material company circumstances change.

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How this policy maps to UK rules

Most of the clauses above exist because of a specific legal or practical pressure. The table below summarises which is which.

Clause	Why it’s there
Pre-tax deduction (Section 3)	HMRC PAYE rules — Payroll Giving must operate on gross pay
Charity eligibility (Section 4)	Restricted to charities registered with the Charity Commission, OSCR or CCNI
Statutory deductions priority (Section 5)	Employment Rights Act 1996 — lawful deductions and attachment of earnings rules
Right to stop at any time (Section 9)	Section 14 ERA 1996 implication — donations are voluntary
Record keeping (Section 12)	HMRC requires PAYE records to be kept for 3 years after the tax year
Data protection (Section 8)	UK GDPR and Data Protection Act 2018

If you want to go deeper on the legal framework, our payroll giving compliance checklist walks through each item with a yes/no test.

Things people get wrong when adapting this template

Confusing Gift Aid with Payroll Giving. They are different mechanisms. Payroll giving gives the employee tax relief at source; Gift Aid lets a charity reclaim basic rate tax on a donation from net pay. Don’t conflate them in employee comms.

Promising matched giving you can’t sustain. A 100% match looks generous in year one. In year three, when participation has tripled, finance will be less keen. Set a per-employee cap, an annual budget cap, or both.

Forgetting NIC. Payroll giving reduces income tax, not National Insurance. Some employees expect more take-home impact than they get. Be explicit in your comms — and in the worked example in Section 3.

Treating it as a CSR campaign rather than a payroll process. Payroll giving lives in payroll. Marketing and HR can promote it, but the operational owner has to be someone who understands PAYE. A poorly run scheme — late remittances, missing deductions — does more reputational damage than not running one at all.

Not reviewing the agency. PGA fees and service quality vary. Compare at least two providers every two or three years. Our overview of choosing a payroll giving agency covers what to look at.

When to extend the policy

Once the basic scheme is bedded in, employers often layer on:

• Quality Mark accreditation. The Payroll Giving Quality Mark recognises employers running schemes well, with Bronze, Silver, Gold and Platinum levels based on participation rates.
• Charity of the year programmes — see charity of the year programmes.
• Linked volunteering days for employees donating regularly.
• Annual giving campaigns tied to specific events (Red Nose Day, Christmas appeals, disaster response).

Each of these benefits from being added as a numbered appendix to the core policy rather than rewriting the whole thing. Keep the core stable; let the campaigns flex.

A final word on tone

Policies that get read are policies that sound like a person wrote them. Strip out the “the Company reserves the right” language where you can. Employees engage with payroll giving because it’s a small, easy way to do something good with their salary. The policy that governs it should match — clear, short, and obviously fair. If yours runs to eight pages, you’ve gone wrong somewhere.

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FAQs — JSON-LD enabled

Questions HR keeps asking.

Is a written payroll giving policy legally required in the UK?+

No. HMRC does not require employers to publish a formal policy to operate a Payroll Giving scheme. However, you must use an HMRC-approved Payroll Giving Agency, deduct donations before tax (PAYE), and keep accurate records. A written policy is best practice for transparency, GDPR compliance and consistent administration.

Can we cap how much an employee donates through payroll giving?+

There is no statutory cap on payroll giving donations. Employers can set internal administrative limits if needed, but most UK schemes allow employees to donate any amount up to their gross taxable pay. The tax relief is automatic and applies at the employee's marginal rate.

Do we have to offer matched giving if we run a payroll giving scheme?+

No. Matched giving is entirely optional and not a tax requirement. Many UK employers match donations up to a set monthly figure (commonly £10–£50) to boost participation. If you do match, the employer contribution is paid separately from payroll and is usually a deductible business expense.

How does payroll giving interact with Gift Aid?+

They are mutually exclusive for the same donation. Payroll giving donations are made pre-tax via PAYE, so the donor has already received tax relief and cannot also claim Gift Aid on that gift. Employees can still use Gift Aid for separate personal donations made from net pay.

What happens to an employee's payroll giving when they leave?+

Deductions stop automatically with the final payroll run. The Payroll Giving Agency is notified through the standard payroll submission, and the employee can set up a new scheme with their next employer if they wish. There is no portability between employers — each scheme is set up fresh.