Payroll-giving consultation launched

The government has launched a consultation on proposals to reform payroll giving, including simplifying the scheme’s administration and making it easier for employees to give through their payroll.

Payroll-giving schemes allow UK employees to donate to charity through their pay on a tax-free basis. Donations are deducted from gross pay, so each £1 given will only cost a basic-rate taxpayer 80p.

The government’s proposals include:

  • Introducing the provision of exit packs when an employee stops giving to the scheme, which includes materials to help them maintain a relationship with their chosen charity.
  • Bringing in standardised forms to make sign-up for donors simpler. 
  • Reducing the processing time from 60 to 30 days to make sure charities receive donations faster.
  • Opening up the payroll-giving agencies (PGA) market to competition from non-charities to allow new entrants to invest in and improve the system.Under current rules all PGAs must be charities.
  • Ensuring that PGAs are transparent to donors on the cost of processing their donation.

Sajid Javid, economic secretary to HM treasury, said: “Charities do vital work in our communities, and this government is committed to helping them achieve more.

“Payroll giving is a powerful and flexible way for people to support the causes they care about. The scheme has real untapped potential, not just for raising money for charity directly, but also for starting a giving culture among those that do not normally donate.

“The proposals that the government is publishing today are an important step in raising awareness and making this scheme work better for donors and charities alike.”

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Nick Hurd, minister for civil society, added: “We want to explore ways that make giving to good causes easier and help to build better connections between business and charities.

“Payroll giving is an underdeveloped opportunity. This consultation is focused on how we can make it work much better for donors, employers and charities.”