Payroll Giving Questions and Answers

Q: What is Payroll Giving?
Q: Why should I offer Payroll Giving to my employees?
Q: How does Payroll Giving work?
Q: Isn't it complicated?
Q: What records will I need to keep?
Q: Who pays for the administration?
Q: How do I find an agency?
Q: Can I pay the agency's charge?
Q: Are there any grants available to set this up?
Q: Can anyone who works in my company join the scheme?
Q: Can I match the donations made by my employees?
Q: Can I use Payroll Giving to support my company's chosen charity of the year?
Q: Do I need to know the names of all the charities to which my employees wish to donate?
Q: Will my employees get unwanted mail from charities asking for money?
Q: I want to run a Payroll Giving scheme.
Q: How can I get the most out of my Payroll Giving scheme?

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Q: What is Payroll Giving?
Payroll Giving is a simple, tax-effective way for your employees to give to charity from their pay. Over 10,000 businesses already offer the benefits of Payroll Giving to around 5 million employees. And the numbers are growing all the time. This guide answers your questions about Payroll Giving and tells you how to get your own scheme up and running.
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Q: Why should I offer Payroll Giving to my employees?
Running a Payroll Giving scheme can be good for your business. It shows that you are committed to working in partnership with the community, something that is increasingly important to customers and staff. It shows that you care about your staff. Offering them the benefits of Payroll Giving can help to build better employee relations and attract the right people to come and work for you. It is easy and inexpensive to run, and you get a deduction against your profits for your costs. Research shows that companies offering Payroll Giving believe it improves the company image, enhances community involvement programmes and supports employee volunteering. 96% of companies feel that Payroll Giving is something a good employer should offer and nearly all said they would like to increase participation levels in their organisations.
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Q: How does Payroll Giving work?
Simple. Your employee asks you to deduct regular charitable donations from their pay. You make the deduction from before-tax pay - in other words, after calculation of National Insurance Contributions but before deduction of Pay As You Earn tax. This way your employee gets tax relief straightaway at their top rate of tax. For example, giving £10 a month costs a basic rate taxpayer only £7.80 because they save £2.20 tax. For a higher rate taxpayer the cost is only £6 because they save £4 tax. You as an employer pay over all the money you deduct to an Inland Revenue-approved Payroll Giving agency, and they do the rest - distributing the money to the charities nominated by your employees.
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Q: Isn't it complicated?
No. Most of the administration is carried out by Payroll Giving in Action and your chosen agency. All modern payroll systems can handle Payroll Giving. There are no tax forms to complete. And the records you need to keep are straightforward.
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Q: What records will I need to keep?
You will need to keep a copy of your contract with the Payroll Giving agency, the forms completed by your employees authorizing you to make deductions from their pay, a record of the deductions made from each employee's pay, and receipts from the Payroll Giving agency.
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Q: Who pays for the administration?
Most of the administration cost is incurred by the Payroll Giving agency. They normally make a small charge which they deduct from donations before distributing them to charity. The charge is normally no more than 4 per cent of the donation, or 25p per payroll deduction, whichever is the greater. Your administration costs should be very small and are likely to be absorbed in your existing payroll costs. In any event, any costs of running a scheme will be allowed as a deduction against your profits.
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Q: How do I find an agency?
There are three main Inland Revenue-approved agencies in the UK:

• Charities Aid Foundation www.allaboutgiving.org
• Charities Trust www.charitiestrust.org
• South West Charitable Giving www.swcg.co.uk

Your company simply decides which agency to work with and then signs an Inland Revenue approved contract. The agency informs the Inland Revenue that your company is operating a payroll-giving scheme.
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Q: Can I pay the agency's charge?
Yes. Many employers like to do this so that the full amount of their employees donation go to charity. If you pay the agency's charge this will be allowed as a deduction against your profits.
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Q: Are there any grants available to set this up?
Yes. In the 2004 Budget, the Chancellor announced the launch of a Payroll Giving Grant for small and medium sized enterprises (SMEs) to set up Payroll Giving schemes. The aim of the Payroll Giving Grant is to increase the number of employers offering Payroll Giving schemes to their employees. The Grant will assist SMEs with fewer than 500 employees in covering the cost of setting up new schemes. When the scheme is introduced later this year, it will be available to employers who have set up new Payroll Giving schemes since April 2004. The Grant will be available for two years.
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Q: Can anyone who works in my company join the scheme?
Any employee or pensioner from whose pay or pension you deduct Pay As You Earn tax may join the scheme. There are no limits as to how little or how much an employee can give. Most employees give £5 per month.
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Q: Can I match the donations made by my employees?
Yes. This is an excellent way of demonstrating your commitment to the community and building good relations with your employees. Any matched donations you make will be allowed as a deduction against your profits.
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Q: Can I use Payroll Giving to support my company's chosen charity of the year?
Yes, although your employees will be free to give to any charity they choose.
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Q: Do I need to know the names of all the charities to which my employees wish to donate?
No. Besides, your employees may wish to keep their choice of charity confidential. Payroll giving companies will provide charity nomination forms which your employees can complete and return. Some agencies provide a charity card or charity cheque book so that your employees can give directly to the charities of their choice whenever they want.
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Q: Will my employees get unwanted mail from charities asking for money?
Most charities like to write to their donors to thank them and give them information about how their donations are being used. The information provided by your employees is protected under the Data Protection Act and can be used only for the purpose for which it was given.
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Q: I want to run a Payroll Giving scheme.
How do I get started? The first thing to do is contact Age Concern Harrow and we'll set the wheels in motion for you.
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Q: How can I get the most out of my Payroll Giving scheme?
To get the most out of running a Payroll Giving scheme it is important that it is promoted effectively to your staff. Age Concern Harrow would be happy to help promote your Payroll Giving scheme. We can help raise awareness of several Harrow-based charities. We can help to make Payroll Giving fun and appealing, and give examples of local people that are helped by the services we offer.
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