Setting up a Payroll Giving Scheme

If you are an employer and want to help your employees support charities long term, you can set up a payroll giving scheme.

Setting up a Payroll Giving Scheme

Payroll Giving is one of the easiest and most flexible methods of giving to charity. It is easy to set up and is a low cost initiative to operate. It enables employees to make valuable charitable donations straight from their salary and provides a continued and vital stream of income to charities and local community groups. An agreed amount is deducted from an employee's gross salary and sent to an approved payroll giving agency who pay it directly to the nominated charity.

All modern payroll systems can handle payroll giving. The monthly donation is taken for pre-tax pay. i.e after calculation of National Insurance contributions but before PAYE is deducted. The payroll department will process the payroll deductions and send all donations to your Payroll Giving Agency. If you offer matching of the employees donations, you will need to transfer these funds to your Agency.

The Agency will deduct a small administration fee (usually 25p or 4% of the donation) from each donation to cover its costs. Many employers arrange to pay this fee on behalf of employees so that 100% of employees' donations goes to the charity.

Employees will see the pre-tax deduction from their payslips. If an employee is a basic rate taxpayer, a monthly donation of £10 will show up on the employees payslip as a pre-tax deduction of £10, but this is equivalent in cost to the employee of £7.80 after tax. Donations are deducted until the employees inform you to stop or change their donations. The Agency will report back to you so that you can keep track of total employee donations and any matching you provide. There are no tax forms for you to complete for either the employee or the company and record keeping is straightforward.

Records that a company needs to keep are:

1. A copy of the contract with the payroll giving agency.
2. A copy of your employee's donor form authorising deductions from their pay.
3. A record of deductions made from each employees pay receipts from payroll giving agency.

Please contact us for help and advice on setting up a new payroll giving contract.

Tel: 01271 326131

email: enquiry@payrollgiving.co.uk