News story

Payroll Giving overhaul announced

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Government action to encourage charitable donations using Payroll Giving

A charity box

New proposals to make it quicker for charities to collect donations and easier for employers to encourage charitable donations using Payroll Giving have been announced by the government.

Following a consultation, the government is to almost halve the processing time for donations from 60 to 35 days, allowing charities to access the money that has been donated more quickly.

The government will create improved webpages that will provide an online presence for donors, employers, charities and Payroll Giving agencies.

The government will be hosting a series of working groups, involving charities, Payroll Giving agencies and other stakeholders, to help Payroll Giving agencies and charities consider further improvements to the Payroll Giving process.

Payroll Giving enables individuals to donate money to charity directly from their salary via their employer, meaning that their donation is made free from income tax.

This means that the charity receives the full donation upfront, rather than having to reclaim the tax afterwards, as through Gift Aid.

In 2012 to 2013, Payroll Giving raised £124 million for charities from 750,000 donors.

Over £1.4 billion has been donated using this method in the last 25 years. However it is thought that the total amount collected could be considerably higher.

The Economic Secretary to the Treasury Sajid Javid, said:

The government is strongly supportive of charities, and has introduced a number of measures to encourage charitable giving.

Payroll Giving provides a unique way for employers to encourage and champion donations, and the government is committed to increasing the amounts raised through Payroll Giving.

Cabinet Office Minister Nick Hurd added:

These are useful steps in making Payroll Giving work better for donors, employers and charities. They are part of our broader strategy to make it easier and more compelling to give.

This support for Payroll Giving follows a number of measures to support the charitable sector by the government, including the Gift Aid Small Donations Scheme, the Cultural Gift Scheme, and introducing a reduced rate of inheritance tax for estates that leave a significant donation to charities.

This response follows a consultation that ran from 24 January to 19 April 2013, and took in views from charities, businesses, individuals, professional fundraising organisations, and Payroll Giving agencies.

Photo by Mindfulone on Flickr. Used under Creative Commons.

Published 13 September 2013