Payroll giving
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October 2019
Payroll giving, also known as ‘workplace giving’ or ‘give as you earn’, is a tax-efficient scheme allowing employees to donate whatever they wish to one or more UK-registered charities of their choice. All donations are taken from their gross salary after National Insurance contributions but before income tax are calculated and deducted. So, a £10 donation will only cost an employee £8 if they are a basic rate taxpayer or £6 if they are a higher rate taxpayer.
Although payroll giving has been around for more than three decades – since 1987 – many employees are still not aware of it.
It’s simple, straightforward and free to set up a scheme. You need to sign a contract with a payroll giving agency (PGA), which will administer the scheme and forward donations to all the charities chosen by your employees. PGAs are registered charities, but to cover their administration costs they deduct a small fee from the donation – usually around 3-4%. Some employers cover this admin fee, so that 100% of their employees’ donations reach their chosen charities; and some match donations as a one-off or on an ongoing basis, which can really motivate employees to sign up. The main PGAs are Charities Aid Foundation, Charitable Giving and Charities Trust.
Once set up with a PGA, you’ll need to promote the scheme to your employees. If you have a charity partner, you might want to make them the focus of your campaign, while making it clear that employees can choose to give to any UK-registered charities or charitable organisations. To encourage employees to sign up, you can make the promotional campaign fun with a seasonal theme, such as Halloween, Valentine’s or Christmas. Or you can add an element of competition, such as rewarding the team or region with the most sign-ups with, say, a free lunch, an hour off work, or other incentives. There are even free professional fundraising organisations, which can help plan and execute a fun and engaging promotional campaign.
After the scheme has been set up and promoted, and employees have decided whether to join and which charity to support, the payroll department’s role is straightforward. It only sends one payment and listing to the chosen PGA monthly (or however often your employees are paid). There is no need for any additional software to run a scheme.
“We see real value in payroll giving and the benefits it brings to the charity. Payroll giving provides us with a regular, long-term income stream to help us support vital research to find new, better ways to prevent, diagnose and treat cancer.
“We’d like to see more companies offer it to their employees so that even more people can support charities in this valuable and tax-efficient way.”
Kathryn Toner, head of individual giving, Cancer Research UK
The benefit of payroll giving to charities is a regular and reliable income that allows them to plan ahead and budget for the future, while the tax relief encourages donors to give more. For employees, payroll giving is quick, easy and offers them complete control over their donations without having to give out their bank details.
What’s more, the tax relief may even move a donor to a lower tax bracket. In return for promoting payroll giving with success (and re-promoting it on a regular basis as there will always be staff changes), businesses that offer a scheme are eligible to receive bronze, silver, gold, platinum and diamond quality marks when they achieve certain benchmarks. A quality mark logo can be used on company literature in recognition and celebration of the achievement.
Businesses with a quality mark can also enter the annual National Payroll Giving Excellence Awards (payrollgivingawards.co.uk), which showcases the UK’s best schemes. There are plenty of categories from most innovative scheme to best partnership, and the awards offer an excellent opportunity for positive communication and recognition of an organisation’s efforts.
If you already have a scheme in place, try reminding your staff about the scheme with an internal promotion and show them how they can help small and large charities across the country achieve their ambitious aims. At Cancer Research UK, it’s only thanks to our generous supporters and partners that we can keep funding lifesaving work to bring forward the day when
all cancers are cured.
“Payroll Giving is a great scheme to have in place for employees – it is free and easy to set up. At Cancer Research UK we have had it in place for years and have found the administration process very easy to operate with minimum time required to keep it working effectively. The scheme is promoted regularly and annually our staff contribute over £30,000 to causes close to their hearts. They can donate to any charity they wish to support, not just Cancer Research UK.”
Kresh Veerasamy, payroll and systems specialist, Cancer Research UK