Payroll giving for employers

How Payroll Giving works for employers

Payroll Giving lets your employees (and people who receive a company/personal pension) make donations to charities of their choice directly from their pay providing they pay tax through PAYE. They can donate as much or as little as they want.

If you decide to run a Payroll Giving Scheme for your employees you'll make regular deductions from their pay through your payroll system. You deduct the amount an employee asks you to take from their pay after working out and deducting their National Insurance contributions, but before applying PAYE.

You pass on all the donations you've deducted to an approved Payroll Giving Agency. They then distribute the donations to your employees' chosen charities you don't have to do anything else.

All modern payroll systems can be set up to handle Payroll Giving and there are no extra tax forms to fill in.

The advantages of Payroll Giving

Payroll Giving is simple to operate and it can help you to build good relations with your employees. Charities benefit because they get regular donations to help them with good causes. And your employees benefit because they get tax relief on the donations straight away at their top rate of tax, meaning that their donations cost them less.

For example, it would only cost an employee who pays tax at the basic rate of 20 per cent £8 to make a £10 donation to their charity. And it would only cost an employee who pays tax at the higher rate of 40 per cent £6 to make the same sized donation.

Setting up a Payroll Giving Scheme

To set up a Payroll Giving Scheme all you have to do is sign up with an approved Payroll Giving Agency. HM Revenue & Customs (HMRC) approves Payroll Giving Agencies and lists them on its website. Each Payroll Giving Agency is itself a charity.

You just have to set up your payroll system for Payroll Giving. Then you can offer the scheme to your employees. Payroll Giving - information for employers and pension providers