Payroll Giving was introduced in 1997 to encourage employers to allow employees to deduct charitable donations from their pay before PAYE is calculated. The scheme effectively allows taxpayers to make a tax free donation to charity directly from their pay or pension.
Payroll Giving has raised over £1.3 billion for charity since it began twenty five years ago. Currently the use of the scheme is minimal. 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 to charity.
The Government has 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.
The Government is also working with employers to help encourage an increase in the amount of donations made to charity using the payroll giving scheme.