Payroll giving reforms unveiled

The Government are proposing changes to payroll giving designed to increase the number of employees donating.

Payroll giving allows UK taxpayers to make regular tax-free donations to good causes on a tax free basis through deductions from their gross pay.  However, only around 2% of employers currently offer payroll giving schemes with just 3% of employees donating.

The Government wants to simplify the scheme and make it easier for people to give.  It is currently consulting on proposals which include:

•    Introducing ‘exit packs’ to help employees maintain a relationship with their chosen charity if they choose to end payroll giving;

•    Introducing standardised forms to make it easier for donors to sign up;

•    Reducing the time it takes to process donations from 60 to 30 days so charities may receive the donations faster, and

•    Allowing non-charities to invest in the payroll giving agency market to improve the system.

The consultation closes on 13 April 2013.

Payroll giving is an excellent way for employees to make tax free charitable donations directly from gross salary.  However, the take-up among employers is still relatively small.

The Government hopes that its proposals, if implemented, will encourage more employers to offer the scheme and, ultimately, more employees to sign up.  In the meantime, any employers looking to introduce such a scheme to their business should seek advice from their accountant in order to find the best scheme for their requirements.

For further information, please contact Lorraine Wilkinson at the office.