What is Payroll giving and how does it help your employees

What is Payroll giving and how does it help your employees?

The benefits of payroll giving

Payroll giving or ‘Give As You Earn’ (GAYE) is a scheme that enables your employees to give to any UK charity directly from their gross salary. There are many benefits of payroll giving for both your employees and your company.

Payroll giving providers

There are several reliable, accredited payroll giving providers in the market, each with their own unique offerings. Some of the options are:

1. Direct to charity – Employers sign up online, choose which charity(s) they want to support, and their donations are passed directly to their chosen charity.
2. Charity Account – The donation is deducted in the same way but goes into an employee’s own personal account, which they can then access online and make onward donations. Donors can either set up standing orders to support charities of their choice or make ad-hoc donations, sponsor a friend or colleague, or support a specific appeal.
3. Staff charity fund - Employees’ GAYE donations are pooled so that staff can make a more substantial donation to the charity(s) of their choice.

Payroll giving benefits for the company

Demonstrates your company’s commitment to supporting the community to wider stakeholders and show employees that you care about the things that are important to them.

1. It can boost staff morale and motivation, which aids retention and recruitment.
2. Payroll giving offers a digital-friendly user experience to deliver online support for processing which means that you don’t need a dedicated person to administer your scheme.
3. Provides external recognition for charity contributions through government-recognised quality marks to contribute to making you a preferred employer.

Payroll giving benefits for employees

Payroll Giving also empowers employees to support the causes that are the most important to them.

Payroll giving comes out of a person’s salary after national insurance, but before tax. This means that your employees get tax relief on your donation that can be passed onto your charity. If you’re a higher tax rate payer, then this benefit increases.

Payroll giving benefits for charities

The benefits of payroll giving for charities are as follows:

1. It provides charities with a long-term and regular income stream.
2. It alleviates the administrative cost and burden of reclaiming Gift Aid.

Payroll giving example

Here’s an example of how it works:

You’re a standard taxpayer at 20 per cent and make a monthly donation of £20 to your chosen charity. When the money is taken from your salary, you’ll be paying £16 but the remaining £4 will be money you would have paid in tax and not seen in your wages anyway. So, it has cost you £16 to give £20.

Payroll giving has benefits for your company, your employees and the charities involved. It’s a win-win for everyone involved. Payroll giving is relatively easy to set up and the benefits will be huge for everyone concerned. If you’re interested in setting up a Payroll giving scheme, then contact our payroll teams today at our offices in Chester, Wirral and Liverpool.