If a scheme is set up and running properly there should be no difficulties in meeting the 35 days deadline but delays can occur when:
- Charities don’t advise PGAs of changes in bank details or addresses
- There is a lack of, or inaccurate, information about the charity
- The charity is new to the PGA (60 days is allowed to verify new charities)
- The charity has closed
- There is a change of person responsible for the Payroll Giving scheme in the workplace
- The money is forwarded to a PGA without the employee listing, so the PGA will need to chase the data before being able to pay out the donations
- An employee’s sign up form or registration has not been received by the PGA and they have no record of a donor
- A change in value of deduction is not accompanied by an instruction on which charities are being supported
- Employer does not send over funds as set out in legislation
It allows tax-efficient donations to be made via pay – an employee’s donation is taken before their tax liability is calculated, reducing their overall tax liability which means that it costs them less to donate. The value of the tax benefit is dependent on the tax code of an employee, so for an employee taxed at the lower rate of 20%, their donation will cost them 20% less overall while a higher rate tax payer will benefit from 40% tax relief.
Anyone can join Payroll Giving if their pay or pension is taxed through PAYE and their employer offers the scheme. There are no fees for an employer to set up a Payroll Giving scheme. Other brand names for Payroll Giving include Give As You Earn and Workplace Giving.
A Payroll Giving Agency is an organisation that is registered with HMRC which allows them to process employees’ donations before tax is calculated.
All PGAs are registered charities and their Payroll Giving activity is regulated and audited by HMRC. You can find a full list of HMRC-approved PGAs here
PGA members of the APGO are:
Charities Aid Foundation
This simple document lays out the obligations of the agency, employer and employee and ensures that all Payroll Giving activities comply with The Taxes Act and The Charitable Deductions (Approved Schemes) Regulations 1986 (and subsequent amendments).
The PGA notifies HMRC that the agreement has been signed and this means that the employer can begin to deduct donations from pre-taxed income.
Professional Fundraising Organisations (PFO) work with employers to recruit Payroll Giving donors in the workplace on behalf of charities.
Many charities recognise the benefits of employing the services of a PFO to promote their cause and recruit new donors.
PFO members of the APGO are:
Hands On Payroll Giving
Payroll Giving In Action
StC Payroll Giving
The Payroll Giving Team