Cashing In On Payroll Giving

Last updated: 07/09/2006 - 10:49

Payroll Giving is used by more than 500,000 UK workers as an easy and tax-effective way to support their favourite charities.

Over 500,000 British workers use payroll giving schemes, to support good causes, but what are these schemes, and how do they work? Payroll Giving is an easy and tax-effective way for employees to support their favourite charities.

Donations are deducted from pay, before PAYE tax is calculated, so that a £10 gift costs a donor just £7.80 - or just £6, if they are a higher-rate taxpayer. With the addition of the government's 10% supplement, this donation is currently worth £11 to charities.

Payroll

Results to date show that the government's campaign, to promote payroll giving in the workplace, is hitting the mark.

Some £55 million was donated to charities, through payroll giving, in the year to April 2001, compared with £37 million, in the previous year. Nearly 1,500 employers set up a payroll giving scheme, for the first time, enabling 680,000 more employees to contribute in this way.

An improved package of tax reliefs, designed to increase charitable giving, was introduced from April 2000. These Getting Britain Giving measures were introduced, following extensive consultation with the charity sector.

Getting Britain Giving includes:

  • Payroll Giving scheme - abolition of the maximum limit of £1,200 a year, a three-year promotional campaign and a 10% supplement on all donations for the duration of the campaign

  • Gift Aid - abolition of the £250 minimum limit for donations, and allowing donors to join the scheme by telephone, or via the Internet, with a minimum of formality

  • A new income tax relief for gifts of shares and securities

  • An extension of the tax exemption for charity fundraising events

  • The measures are estimated to be worth about £400 million a year, to charities, in extra tax relief


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