Posted by jonathanfullarton - November 1, 2019 1:18 pm Payroll Giving – What Is It And What Are The Benefits?
Corporate Social Responsibility has never been more important
Rather than signing up to charities on the street, why not allow your employees to give regular charitable donations through payroll and save tax at the same time?
As an employer, you will be uniting your workforce to a collective goal, which you can add to as an incentive if you wish.
What is Payroll Giving?
Payroll Giving is a simple and tax-efficient way for your employees to donate regularly to a charity of their choice.
Benefits for your employees
- Your employees can decide on their charity of their choosing and the amount they wish to pay.
- Your staff will not need to provide their registered chosen charity with their bank details so they can rest assured that this is a secure method of donating.
- Payroll Giving provides an easy way for busy people, who simply would not have the time otherwise, to make charitable donations.
- The added feel good factor your staff will have when ‘doing their bit’ for charity.
Benefits for your business
- By setting up a Payroll Giving scheme, you are making payday even better by becoming part of a team that raises millions for charities across the country, every payday.
- You unite your team in your corporate social responsibility (CSR) activities.
- Payroll Giving earns you recognition via the Quality Mark Scheme and the National Payroll Giving Excellence Awards and are a great way to promote your business to future employees and other stakeholders.
- You also benefit from the feel good factor in running a PG Scheme..
Benefits for charities
- Provides regular income which aids charities to plan ahead.
- By claiming back Gift Aid charities can receive more money and as this is set up by the employer this will save the relevant charity’s admin time.
How does it work?
Donations are deducted from the employee’s salary before tax making it a fully tax-efficient way of giving.
- For example, a £12.50 donation out of gross pay means that only £10 comes out of Net pay for a standard 20% taxpayer.
- The difference is even better for higher rate taxpayers with 40% taxpayer’s £10 donations providing £16.67 to their nominated charity and;
- Additional taxpayers, those who pay 45%, providing a donation of £18.18.
Payroll Giving agencies
Having signed up with a Payroll Giving Agency (PGA), you will then pay over your payroll collected donations. The PGA will then distribute these donations to your employees’ chosen charities. There are small set-up and admin fees for this service but these are deductible from your corporation tax liability.
Promoting your Payroll Giving
To help promote this to your workforce, you could:
- nominate a group of staff volunteers,
- set an example by being the first to sign up, and;
- even arrange a visit from a Professional Fundraising Organisation who are experts at promoting fundraising events and will send trained fundraisers free of charge.
Useful Links
For more information on selecting charities for your and your staff’s donations visit:
- The UK Charity Register for a list of charities, or;
- Charity Commission
Need more payroll help?
Should you need any advice on setting up a Payroll Giving Scheme or would like greater payroll support then do contact your local MFW office who will be delighted to help.
Our payroll services are designed to be flexible to suit our clients’ needs and range from simple ad-hoc advice to providing full payroll support including BACs bureau function where we can process payments on your behalf.