Payroll Giving, or Give As You Earn, is a way for your employees to make regular donations to us directly from their pay. People who receive a company or personal pension through PAYE can also use this method as a way to donate. All payments are made directly through the salary before tax is deducted, which means that donors get immediate tax relief on their donation, and at their highest rate of tax.
Payroll Giving is becoming a more and more usual way of donating to charity and so it’s quite easy to set up a payroll giving scheme. There is little cost in administration and the majority of payroll systems are already set up to manage it. We will always aim to keep this page up to date, however, you should always check with your accountant, tax advisor or HMRC before instigating payroll giving. This page was last updated in January 2013. For more information please see the HMRC website here.
How It Works
If you decide to run a payroll giving scheme you will need to make deductions from the pay of participating employees from their salary. These donations are made after National Insurance contributions have been calculated, but before PAYE is calculated. All donations taken are then passed on to a licensed payroll giving agency, who will then pass the donations on to us. There will be no extra tax forms for you to fill in.
Benefits of Giving In This Way
Everyone can benefit from Payroll Giving. For the employer it is a good way to build good relationships with your employees. We would benefit through a regular payment. Your employees would benefit as their donation is taken pre-tax, meaning that if they donate £10 it will only cost a standard rate tax payer £8 and a higher rate tax payer £6, but we will still receive £10.
Setting up a Payroll Giving Scheme
You will need to register with a Payroll Giving Agency. Each agency is a charity in its own right and a list of them can be found on the HMRC website. Although you may want your employees to support us, there is no legal obligation for them to do so and they are free to opt in and opt out of payroll giving as they see fit.
Costs Involved With Payroll Giving
The bulk of the work for Payroll Giving is handled by the Payroll Giving Agency and it is they who will meet the costs. They may make a small charge for the service, but this is taken from each donation and is offset by the tax relief that they can claim. You are free to pay this cost as your part of the donation and if you choose to do this you must remember to offset this against your profits for tax purposes. Once the system has been established then it becomes a regular part of your payroll procedure.
What You Need To Keep
If you set up a Payroll Giving scheme you will need to keep the following documents;
- Your contract with the Payroll Giving Agency
- The employee forms requesting you to make a donation on their behalf
- A record of all deductions that you make
- A record of the money you pass on