Payroll Giving is a scheme in which employees who pay tax by Pay As You Earn (PAYE) can make single or regular donations to a charity directly from their earnings, before income tax is deducted. The payroll administrator in your company deducts the donation from your gross salary before tax is taken off and sends it, via a Payroll Giving Agency, to the charity of your choice. This means that you are able to give more while actually paying less.
- If you are a basic rate taxpayer and you pledge to donate £10 through Payroll Giving, you only actually have to pay out £8.
- If you are a higher rate taxpayer and you pledge to donate £10 through Payroll Giving, you only have to pay out £6.
What are the benefits of Payroll Giving?
For the donor, Payroll Giving is one of the most tax efficient ways to donate. As shown above, the donation that is sent is 20% or 40% higher than the amount you actually have to pay. Payroll Giving is straightforward to set up and requires no maintenance once it is set up so it is particularly suitable for busy people. Equally, Payroll Giving is very flexible as you are able to donate to several charities at the same time and can donate as much or as little as you would like for as long as you like.
For The Islamic Texts Society, receiving donations through Payroll Giving is very positive. The process is simple, and has very little time-consuming administration work, so we can dedicate more time to publishing our books.
How do I start donating by Payroll Giving?
To start making donations to The Islamic Texts Society by Payroll Giving you first need to find out from your employer if the company has a Payroll Giving Scheme in place. If they do, they will provide you with the necessary form and your donations can usually be set up immediately.
If your company doesn’t currently have a Payroll Giving Scheme in place, this is not a problem. Whatever the size of the company, a Payroll Giving Scheme is quick and easy to arrange so your employer should be keen to participate. All the company has to do is register with a Payroll Giving Agency. You can help this process in one of two ways:
- You can direct your employer to the government’s information on Payroll Giving, including a list of approved Payroll Giving Agencies, at www.hmrc.gov.uk
- Or, you can request that the Charities Aid Foundation, an approved Payroll Giving Agency, provides your employer with details on setting up a scheme. You can telephone the Charities Aid Foundation on 0300 012 3000 or go to www.cafonline.org
What about if I want to stop or change my donations?
You can stop or change your donations at any time by writing to your payroll department.
Do all employees in one company have to donate to the same charity?
No, each employee can choose which charity or charities they would like their donations to go to.
Can The Islamic Texts Society reclaim Gift Aid on my donation?
No, in this case The Islamic Texts Society cannot reclaim Gift Aid because, as the donation is taken from the donor before income tax has been paid on the amount, the charity automatically receives the additional tax on the donation.
Does my employer have to know which charity I am donating to?
Your employer does not have to know which charity you are donating to if you prefer that the information remains private. When you decide to set up donations through Payroll Giving you will fill in a form. You can either give this form to your employer or you can send the form directly to the Payroll Giving agency your company uses. If you choose the latter route, your employer will only know that you donate a certain amount to a charity.
Where can I go for more information?
To find out more information about Payroll Giving you can contact the following organisations:
- HM Revenue and Customs at www.hmrc.gov.uk or on 0845 302 0203.
- The Payroll Giving Centre at payrollgivingcentre.org.uk or on 0845 602 6786. This is an independent resource centre which is hosted by The Institute of Fundraising.
- The Islamic Texts Society by email at email@example.com or on 01223 314387.