[ Question ]

How to give as you earn in the UK? GAYE vs. GiftAid

by James Smith1 min read14th Jul 20202 comments


Personal Finance

I am employed by University of Oxford and want to give as I earn. The University has a give as you earn (GAYE) scheme administered through the charities aid foundation (https://www.cafonline.org/). The fees for this seem high (4%, capped at £10), and at my current salary I think GiftAid would fully cover my tax deduction. GAYE seems administratively easier but possibly less cost-effective. What do others in a similar situation to me do? Are there reasons to think that the 4% fee for GAYE are worthwhile?

This post was useful as a summary of UK giving but I am unsure if it's up to date. It suggests that GiftAid would be best in my income bracket: https://forum.effectivealtruism.org/posts/tNfDWLzBMi9HnoTkE/uk-income-tax-and-donations

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Does the organisation you're giving to allow you to set up a regular direct debit with Gift Aid? I'm pretty sure EA Funds does this, so anything you can donate to through there would be as easy administratively as doing the GAYE scheme, and I don't think there's any fee.

The real benefit from the GAYE scheme would come once you're looking at claiming back tax for yourself (i.e. when you start paying more than Basic Rate tax). And even at this point there are other options. When I was giving fixed amounts on a monthly basis a few years ago, I used the live chat on HMRC's Income Tax Page to notify HMRC about my regular donations, and they updated my tax code to take them into account. (my employer didn't support Payroll Giving, otherwise I might have done that instead)

Thanks a lot for this response. I would probably donate through EA funds, so yes that should work. It seems like doing that with GiftAid will be a better bet than GAYE in my case then. The tip about HMRC is really useful to know - I have a friend who is giving regularly through GAYE and paying the 4% fee who is in a higher tax bracket, so I've recommended that he try this instead.