Your Questions Answered

What is Payroll Giving?

It may surprise you to know that a recent National Opinion Poll survey shows that, each month, around two thirds of us give to charity. Payroll Giving is a simple, tax effective way for your employees to make donations. Over 9,000 businesses already offer the benefits of Payroll Giving to around 5 million employees, and the numbers are growing.

Why should I offer Payroll Giving to my employees?

Running a Payroll Giving scheme is good for your business. Not only does it show that you're committed to working in partnership with the community - something that is increasingly important to customers and staff - it also shows that you care about your staff. Offering them the benefits of Payroll Giving can also help to build better employee relations and attract the right people to come and work for you. It is easy and inexpensive to run and you can deduct any administrative costs from company profits for tax purposes.

How does Payroll Giving work?

It's simple. Your employee asks you to deduct regular charitable donations from their pay. You make the deduction from before-tax pay, in other words, after calculation of National Insurance Contributions, but before deduction of Pay As You Earn tax. This way your employee gets tax relief straightaway at their top rate of tax.

For example, it will only cost your employees £7.80 to donate £10 to the charity of their choice (assuming basic rate tax).

You pay over all the money you deduct to an Inland Revenue approved Payroll Giving agency and they do the rest - distributing the money to the charities nominated by your employees.

Is it complicated?

Not at all. In fact, most of the administration is carried out by the Payroll Giving agency. In a recent survey, one employer who runs a scheme said "I see it as a time saving arrangement. The charity agency produces all the figures and stats. All we do is to send them the money. It really couldn't be easier." All modern payroll systems can handle Payroll Giving and there are no tax forms to complete. Plus, the records you need to keep are straightforward.

What records will I need to keep?

You will need to keep a copy of your contract with the Payroll Giving agency the forms completed by your employees authorizing you to make deductions from their pay a record of the deductions made from each employee's pay receipts from the Payroll Giving agency.

Who pays for the administration?

Most of the administration cost is incurred by the Payroll Giving agency. Most agencies make a small charge which they deduct from donations before distributing them to charity. The charge is normally no more than 4% of the donation, or 25p per payroll deduction, whichever is the greater. Your administration costs should be very small and are likely to be absorbed in your existing payroll costs. In any event, any costs of running a scheme will be allowed as a deduction against your profits for tax purposes.

Can I pay the agency's charge?

Yes. Many employers like to do this so that the full amount of their employees' donations go to charity. If you pay the agency's charge this will be allowed as a deduction against your profits.

Can anyone who works in my business join the scheme?

Any employee or pensioner from whose pay or pension you deduct Pay As You Earn tax may join the scheme.

Is there a limit on how little or how much an employee can give?

No, there are no limits. Most employees give at least £5 a month.

Can I match the donations made by my employees?

Yes. This is an excellent way of demonstrating your commitment to the community and building good relations with your employees. Any matched donations you make will be allowed as a deduction against your profits for tax purposes.

Can I use Payroll Giving to support my company's chosen charity of the year?

Yes, although your employees must be free to give to any charity they choose, as well as the company's chosen charity or instead of it.

Do I need to know all of the charities to which my employees wish to donate?

No. Besides, your employees may wish to keep their choice of charity confidential. The Payroll Giving agency will be able to provide charity nomination forms which your employees can complete and return directly to the agency. Some agencies provide a charity card or charity cheque book so that your employees can give directly to the charities of their choice whenever they want.

Will my employees get unwanted mail from charities asking for money?

Most charities like to write to their donors to thank them and give them information about how their donations are being used. The information provided by your employees is protected under the Data Protection Act and can be used only for the purpose for which it was given. Your employees can ask for their name and address to be withheld from the charity that receives their donations.

I want to run a Payroll Giving scheme. How do I get started?

The first thing to do is contact a Payroll Giving agency. A list of agencies approved by the Inland Revenue can be found in Payroll Giving Organisations. The agency will help you to set up the scheme.

How can I get the most out of my Payroll Giving scheme?

To get the most out of running a Payroll Giving scheme it is important that you promote it effectively to your staff.

Tell them that you are starting a Payroll Giving scheme about the benefits of the scheme how to set up the deduction from their pay Involve the trade union or works council if you have one. (All the main trade unions support Payroll Giving.) Give your employees regular feedback about how the scheme is working. Give all new members of staff information about the scheme. And remind all staff, from time to time, how they can start giving or increase their giving. The Payroll Giving agency can advise you on how to promote your scheme effectively. Alternatively, a Payroll Giving professional fundraising organisation can help you. These organisations are paid by charities to promote Payroll Giving in the workplace. They can visit your premises, explain the scheme directly to your staff and help them to fill in a pay deduction form and a charity nomination form - all free of charge.

See the Payroll Giving Organisations section on this site for a list of Payroll Giving professional fundraising organisations associated with the Institute of Charity Fundraising Managers . Some charities also provide a promotional service. If you and your employees want to support a particular charity through Payroll Giving, you should contact that charity direct.

For more tips with promoting Payroll Giving, click here.

Where can I find out more?

Contact any of the Payroll Giving agencies or Payroll Giving professional fundraising organisations in the Payroll Giving Organisations section of the site.