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HMRC internal manual

Business Income Manual

Specific deductions: gifts in kind and payroll giving: payroll giving

S72 Income Tax (Trading and Other Income) Act 2005, S72 Corporation Tax Act 2009

Under S713 Income Tax (Earnings and Pensions) Act 2003, employees may authorise their employers to deduct gifts for charities from their pay. The employers must pay the gifts over to an agency approved by HMRC. The employer’s own expenses of operating the scheme are allowable deductions in the same way as other costs associated with the operation of PAYE. Where the employer voluntarily makes other payments to the approved agency to meet part of the agency expenses, the payment by the employer, to the extent that it would not otherwise be allowable, is also relieved by these above provisions.