What is Payroll Giving?

Payroll Giving is a simple, tax effective way for an employee to give to charity from their gross salary.

When the employer offers Payroll Giving, the employee just authorises the employer to deduct regular charitable donations from pay. The employer then pays these donations to a Payroll Giving Agency approved by HM Revenue & Customs.  The agency will distribute the money to the charity or charities chosen by the employee.

Payroll Giving has the potential to involve more employees than any other work-based fundraising initiative and to raise hundreds of millions of pounds for charities across Wales, particularly in Carmarthenshire.

What are the Benefits?

The agreed deductions the employer makes from the employee’s pay are done before tax, which means that tax relief is included in the donation at the top rate of tax the employee pays. For example:

Employee pledges to Charity (Gross)	Actual cost to Employee @ 22% Tax	Actual cost to Employee @ 40% Tax
£5.00	£3.90	£3.00
£10.00	£7.80	£6.00

The main benefit of Payroll Giving is to create a regular flow of funds for the benefit of the charity or charities of choice.  This is unrestricted income which can be used for core funding by the charity.

Payroll Giving Grants Programme

A new UK-wide initiative – the Payroll Giving Grants programme – was launched in January 2005.  The programme is administered and promoted by the Institute of Fundraising, with funding from the Home Office and support from Business in the Community.

NEW AWARDS SCHEME: In January 2006 the Home Office launched a new Quality Mark scheme, with gold, silver and bronze awards, that recognises and rewards charities and businesses for making Payroll Giving schemes available to staff.

The programme consists of two parts:

Part 1: A one off grant of between £300 and £500 for small and medium enterprises (SMEs) that set up Payroll Giving before December 2006.  Any employer, business or charity, is eligible for grant so long as the organisation has fewer than 500 employees.

Number of employees	Grant
1-199	£300
200-249	£400
250-499	£500

Part 2: Matched donations of up to £10 for each employee every month, for the first six months after they have signed up to the scheme, until 31 March 2007.

This means that £10 donated each month will be worth as much as £20 to the charity and yet it will cost the employee paying basic rate income tax £7.80 (£6 for higher rate taxpayers).  That’s up to £60 extra per employee going to their chosen charity.

For more information about the Payroll Giving Grants Programme and Award Scheme see www.payrollgivinggrants.org.uk