Payroll giving was introduced in 1997 to encourage employers to allow employees to deduct charitable donations from their pay before PAYE. The scheme allows taxpayers to make a tax free donation to charity directly from their pay or pension.
In 2010/11 £11bn was donated to charities. However the payroll giving scheme has not been widely used and is currently worth in the region of £120 million per year.
Last year, a consultation was launched jointly by HM Treasury, the Cabinet Office and HMRC seeking views on plans to improve the scheme and increase overall donations.
As a consequence, the Government announced a number of new measures to help encourage greater use of the scheme. The most important announcement concerns the reduction in the number of days it takes for a donation to be processed from 60 to 35 days. This will allow charities faster access to monies that have been donated.
Any comments on the draft regulations should be sent to HMRC by 18 February 2014.