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What is GAYE?
Give As You Earn (GAYE) is a scheme that allows employees to donate to charity directly from their gross salary. The donations are deducted from the employee's pay before tax is deducted, providing the employee with tax relief on their donation. The scheme is administered by HMRC.
GAYE is an easy and tax-efficient way to support charities, and it can be an effective way for employers to encourage charitable giving among their employees.
How does it work?
To participate in GAYE, an employee needs to choose a charity to support and how much they would like to donate each month. The employer then deducts the chosen amount from the employee's gross pay and sends it to an HMRC-approved agency, which then transfers the donation to the nominated charity.
All employers will need to sign a contract with the Payroll Giving Agency before the donations can commence, and it can take up to 35 to 60 days for the monies to reach the charity.
Please note that charitable donations must be made after National Insurance has been deducted, but before income tax is applied.
How to process this is Pento?
You can set up a recurring deduction (Recurring Pay Item) in Payroll and then use the payroll report to get the figures which then can be paid to your selected GAYE scheme provider.
Please see more information on adding/managing recurring pay items here: How to Add One-Off & Recurring Pay Items to Employees