Most businesses do not have a payroll charity donation scheme, according to a survey of workers from accountant and business adviser KPMG, and are unaware that a grant of up to £500 is available to help set one up.
Most businesses do not have a payroll charity donation scheme, according to a survey of workers from accountant and business adviser KPMG, and are unaware that a grant of up to £500 is available to help set one up.
Donating through a payroll giving scheme means that the money is taken from gross pay, rather than net, effectively costing the employee less. For example, an individual may want to donate £10 a month to their favourite charity. Through a payroll giving scheme the charity would receive £10 but the individual would have effectively given £7.80, assuming they pay standard rate tax. For a higher rate taxpayer, the cost would be even less – just £6.
‘Thousands of companies and their staff are missing out on these schemes’, says Mike Kelly, KPMG director of corporate social responsibility. ‘Payroll giving is the easiest, most tax-efficient way for employees to give to charity. The cost to individuals is less – and the charities receive more.’
To help promote these schemes, Gordon Brown announced in his pre-Budget report, last December, that the Government would provide a grant of up to £500 to companies (with less than 500 employees) who were setting up a payroll giving scheme for the first time.
The Charities Aid Foundation (CAF) manages the Give As You Earn scheme, which is responsible for two thirds of the £90 million given every year through payroll giving. It is backing the Government grant and will support SMEs applying for it.
‘CAF has always advocated payroll giving as one of the most effective ways for companies to support the regular, tax-efficient giving of their employees and although many of the larger companies are signed up, there is still huge potential for smaller companies to offer this benefit to their staff,’ said Jenny Byers, CAF’s executive director of donor services.
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