GeneralTop Benefits for Charities and Business Of Payroll Giving in the UK

Payroll giving is an increasingly popular form of charitable giving in the UK. These schemes allow businesses to make charitable donations quickly and efficiently. But what other benefits are there for charities and companies participating in payroll giving, where PAYE employees give to charity directly from their salary?

What is Payroll Giving?

Payroll giving is a way for PAYE employees to donate directly from their salary to charity. The donation is deducted before tax, so it’s cheaper for the donor and more valuable for the charity. There are several payroll giving schemes in the UK, each administered by a different provider. However, all schemes work in basically the same way. First, employees sign up and choose which charity they want to support. Then, their chosen charity receives donations directly from their salary.

Benefits of Payroll Giving for Employees

There are many benefits of payroll giving for employees, including:

Tax relief: As donations are taken from an employee’s pay before tax is deducted, the employee pays less tax overall. This could mean an employee in the higher tax bracket could save up to 45% on their donation!

Flexibility: Employees can change or stop their payments at any time, making payroll giving a flexible way of supporting one or more charities.

Support multiple charities: Employees can choose to support multiple charities through payroll giving, which helps smaller or lesser-known charities (as long as they are HMRC-approved) that may struggle to receive donations otherwise.

Benefits of Payroll Giving for Charities

Payroll giving schemes have various benefits for charities:

Increased donations: Payroll giving is a scheme that allows employees to donate directly to charity, meaning the donation comes from their salary before tax deductions. As a result, the charity receives more money than if the donor had made a similar donation directly to the charity. This is a significant benefit for charities that rely heavily on donations, as it can help to increase their income over time. It can also encourage employees to donate more regularly, as they know their donation will go further.

Regular income stream: Payroll giving provides a regular income stream for the organisation, which can be extremely helpful in ensuring the financial future of the charity or business. In addition, it provides a predictable amount of money that the organisation can use to plan long-term, high-impact initiatives.

Benefits of Payroll Giving for Businesses

Payroll giving also has several benefits for businesses:

Easy to set up: It is simple and easy to set up, allowing employees to give to charity through their pay. This means businesses can make a difference to charities and the causes they support without extra effort or cost.

Relationship-building: Payroll giving can help businesses build good relationships with charities. Many charities are happy to work with businesses that offer payroll giving, which can lead to unique marketing and fundraising opportunities. This can be an excellent way for companies to raise their profile and increase their exposure to new customers.

Brand awareness: Payroll giving can also help to build brand awareness and reputation. This is because organisations offering this benefit are often seen as more philanthropic and responsible by clients and customers alike.

Enhanced employer-employee relations: When employers offer payroll giving, it shows that they are willing to implement schemes that benefit their employees and the communities in which they operate. This can help to improve morale and motivation and may reduce employee turnover.

Improved corporate social responsibility image: A key benefit of payroll giving for businesses is the potential to improve the business’s corporate social responsibility (CSR) image. In addition, there may be potential tax incentives for companies that offer payroll giving to their employees.

Payroll Giving Quality Marks: The Payroll Giving Quality Mark is a government-supported awards system that rewards organisations for making payroll giving available to employees. Multiple levels of Quality Marks exist, including Standard, Bronze, Silver, Gold, Platinum and Diamond, each with a participation threshold for businesses to receive the award. For example, the Standard award is given when there is any employee payroll participation, whereas the Diamond award is given when at least 30 per cent of employees participate. The accreditation shows potential new hires and customers that a company cares about charitable giving.

Final Thoughts

Payroll giving schemes offer a variety of tangible benefits for charitable organisations, businesses and employees. For example, its prompt payment system minimises the administrative burden for charities with limited staff members that often rely on donations to drive income and implement high-impact initiatives. Companies also have payroll giving schemes to attract new talent and nurture current employees by showing that the business is committed to having a positive wider impact. Finally, employees benefit from these schemes by being able to support multiple charities recognised by HMRC and save money on their tax bills in the process. Overall, payroll giving is an efficient, cost-effective and mutually beneficial way of supporting charities across the UK.

This is a sponsored post