Submitted by
Sestini & Co | on Sun, 03/16/2014 - 19:41 | In
Uncategorized Are you one of the 30 million people in the UK that gives to charity? Do you receive your salary through PAYE? If so, read on to find out how you can make your donations go further and pay less tax at the same time, says Sestini & Co Associate Director, Keziah Rutherford.
Charity begins at home
In the UK more than half of us donate to charities giving £11 billion to causes across the globe every year. However only 3% of donations are made by using payroll giving – an HMRC scheme that benefits donors and charities alike. It is an easy, tax-effective way to give to charity that costs you less to give more.
Too good to be true?
Well it isn’t – Payroll Giving lets you make regular or one-off donations to the charity or charities of your choice directly from your earnings before Income Tax is taken off. This means that because you don’t ever receive this money you get immediate tax relief on your donation. The scheme was set up to encourage charitable giving at a time when resources are stretched and charities are under pressure to provide more.
What a relief
Your taxable income is reduced because the donations are deducted before you are taxed, and you still get all of the tax relief – so a donation of £10 costs you £8 if you are a basic rate taxpayer and only costs a higher or additional rate taxpayers £6 or £5 respectively.
This means that if you:
- earn less than £32,010 a year, and donate £10 a month it will only cost you £96 a year but the charity will receive the full £120
- earn between £32,011 to £150,000 a year, and donate £10 a month it will only cost you £72 a year but the charity will receive £120
- earn in excess of £150,000 and donate £10 a month it will only cost you £60 a year but the charity will receive the full £120 – effectively doubling your donations, incredible!
Regular and reliable
Once donations through payroll giving have been set up, your chosen charity will know it has a regular source of income. This is hugely beneficial and makes it easier to budget and plan.
Get in on the action
To make the most of this scheme talk to your employer to ask if they already have Payroll Giving in place. If they do, they should have a quick and easy form for you to complete, and you never have to remember to give again. It’s also easy to add charities or change charities as you see fit.
If your employer does not yet have Payroll Giving in place it is simple for them to set up – and there are even benefits for them.
Warm feelings and shiny awards
Payroll Giving can help employers to build good relations with employees by showing commitment to causes close to employees’ hearts whilst helping them to receive tax relief on the donations. As if this weren’t enough there are also awards available to employers recognising their dedication to Payroll Giving. You can find out more about the awards here.
If you have any questions about Payroll Giving and how it can benefit you or about setting up a scheme for your employees please do not hesitate to contact us.
Read all about it
HMRC’s introduction to Payroll Giving for employees
And for employers
Everybody loves a calculator
