What is Payroll Giving?
Payroll giving is an easy way for you to make tax-free donations to your chosen charity. For each £1 gross you wish to donate, only 78p will be deducted from your pay if you are a standard rate tax payer. This means you can give money to your favourite charity every pay day in the knowledge that they will be better off by an extra 22% - or 40% if you are a higher rate tax payer.
How does it work?
If your employer does not already run a Payroll Giving scheme you will need to persuade them to start one. It is easy and inexpensive to run, and if they are an SME (with less than 500 employees) they will be eligible for a grant of between £300 and £500 if they sign up to a scheme before the end of December 2006. Additionally, a grant matching the employee contributions (up to the first £10 per month) will be paid for the first 6 months, up to the end of March 2007.
It's easy for your company to set up - all they need to do is sign up with a Payroll Giving Agency - a list of these can be found at http://www.payrollgivinggrants.org.uk/. Each pay period they will need to collect the donations from their employees, and each month send the money to the Payroll Giving Agency by BACS or cheque, together with a listing of the employees and the amount of their donations. The employee will have completed a form instructing the agency with the details of the charity they wish to donate to, and if they wish to change the charity, again, this is done direct with the agency and not via the employer.
How much does it cost?
There are little or no costs to the employer - all payroll systems offer the facility to make charitable deductions, and if they are eligible for the grant this will more than offset any start-up costs. The agency does charge a small administration fee per donation which can either be deducted from the donation or be paid by the employer and offset against company profits.
So everyone can feel good - the employee by knowing that they can make tax-efficient regular donations to their favourite good cause, the employer by demonstrating that they are committed to working in partnership with the community and care about their employees, and the charity because they know they will receive regular, committed income which enables them to plan for the future.
Pip Trowles
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