The Employer/Company Perspective (from https://kindlink.global/business/payroll-giving-scheme)

All official rules for Payroll Giving are listed in here. Employers do not have to run a Payroll Giving scheme but, in practice, most do and all it takes is for an employee to ask (and a company to agree). We’ve summarised what you should keep in mind:

 

To Setup

  • In order to run Payroll Giving the company needs to contract a Payroll Giving Agent registered with the HMRC. You can see here the list with all Payroll Giving agents approved by the HMRC;

  • Payroll Giving agencies must be registered charities, “approved by HMRC for the purpose of acting as an agency under the Charitable Deductions (Approved Schemes);” You may also come across other entities providing this service. When trying to decide the best way forward, keep in mind that such providers will subcontract HMRC-approved agents. This means that you might have to pay twice – once for their software, and once for the percentage charged by the Payroll Giving agent. This also increases the level of your paperwork and chances of errors.

  • The usual amount an agent charges is 4.5% of every processed transaction, but there are cheaper options – for example, you may opt for a fixed-price package, depending on the number of employees your company has.

The Employee Perspective

If you have a cause or charity you want to support on an ongoing basis, then a Payroll Giving scheme is probably the easiest way for you to not have to make monthly arrangements to donate money. You can arrange for your chosen sum to be extracted from your monthly wages by your company, as long as they are running a Payroll Giving scheme. The donations will be taken out before tax is deducted. So start by asking them whether they have this option for their people.

Here are a few things to keep in mind:

  1. You can’t donate to a community amateur sports club (CASC) through Payroll Giving.

  2. There is no minimum amount you can donate, but the standard is £1. The tax relief you get depends on the rate of tax you pay. To donate £1, you pay:

  • 80p if you’re a lower rate taxpayer

  • 60p if you’re a higher rate taxpayer

  • 55p if you’re an additional rate taxpayer