Payroll Services and Payroll Giving

Payroll Giving is becoming more popular. This article looks at what Payroll Giving is defined as, how it works and the key things you need to be aware of as an employer to ensure everything is done correctly.

Firstly, what is Payroll Giving?

Payroll Giving is the term used to describe employees who money to charity without paying tax on it. It must be deducted through an employee’s wages or pension

How does an employer set up and run a payroll giving scheme?

Importantly, an employer must contact a Payroll Giving Agency to set up a Payroll Giving scheme. Once the scheme is set up employees can opt in to give a set amount from their wages for each defines pay period. This is deducted each time an employer runs the payroll. The employer is then responsible for sending the donations to the Payroll Giving Agency.

Does the employee get any benefits?

Yes! An employee will receive tax relief on any donations made through a Payroll Giving scheme. The tax relief an employee receives depends on the rate of tax the employee pays. If for example an employee donates £1 they will pay the following:

  • 80p as a basic rate taxpayer – so the tax relief is 20p
  • 60p as a higher rate taxpayer – so the tax relief is 40p
  • 55p as an additional rate taxpayer – so the tax relief is 45p

Scotland is slightly different. The tax relief for employees who live in Scotland is different. For example, if the employee donates £1 they will pay the following:

  • 81p as a starter rate taxpayer – so the relief is 19p
  • 80p as a basic rate taxpayer - so the relief is 20p
  • 79p as a intermediate rate taxpayer - so the relief is 21p
  • 59p as a higher rate taxpayer - so the relief is 41p
  • 54p as a top rate taxpayer - so the relief is 46p

Talk to us About Payroll Giving and Payroll

If you need help and advice about anything to do with Payroll Giving, please contact us or call us on 0121 422 0550. We are an outsourced payroll bureau, and we can handle all of your payroll requirements so that you can get on with running your business.

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