Overview
Payroll giving is a simple, tax-effective way for employees to give to a charity of their choice. Setting up a scheme is easy, and the costs are minimal.
To learn more about how payroll giving works, click here.
How Payroll Giving Works
Payroll Giving allows you to make donations to charity directly from your pay or company/personal pension. The donations are made after your National Insurance contributions are calculated but before Income Tax is worked out and deducted. Because of this, you only pay tax on what’s left. This means that you get tax relief on your donation immediately – and at your highest rate of tax.
Example:
You pay tax at the basic rate of 20% and authorise a monthly donation of £10. That means you save £2 tax (20% of £10). The actual cost of the donation to you is £8.
How to Set Up Payroll Giving
To set up this scheme, all you need to do is register with one of the following Payroll Giving Agencies:
- Charities Aid Foundation (CAF) – www.cafonline.org
- South West Charitable Giving – www.swcg.co.uk
- Charities Trust – www.charitiestrust.org
Once you are registered, send the payroll giving forms that you receive from your employees to the Payroll Giving Agency of your choice. They will be responsible for adding the tax onto a donor’s gift and transferring the total sum to the donor’s nominated charity. Deductions are made at your next payday.
Why You Should Use Payroll Giving
It’s easy!
The Payroll Giving Agency does most of the administration which means that any costs you might incur are negligible. Any costs you do incur by running the scheme are allowed as a deduction against your profits.
It’s good PR!
Running the Payroll Giving scheme shows that you care about your staff and the community and can inform the type of employee you are likely to attract.
Payroll Giving Quality Mark
The Payroll Giving Quality Mark recognises and rewards employers and pension providers for making Payroll Giving available to their staff.
The quality mark comprises a certificate and a logo, as well as Bronze, Silver and Gold Awards. It aims to provide UK charities with sustainable income streams by increasing participation in Payroll Giving.
