Treasury aims to widen payroll-giving schemes

Of £9.3bn donated to good causes in 2011-12, £118m was via payroll giving

Companies such as JustGiving and Virgin Money may be allowed to run workplace-giving schemes in an attempt to shake up the market and encourage more people to make regular charitable donations from their earnings.

The schemes allow employees to make donations from pay before tax, meaning that higher-rate taxpayers who give £10 to charity see their monthly income reduced by £6. They are popular with charities, who receive a regular income, and allow 40% taxpayers to maximise donations without having to claim gift aid. However, just 2% of UK firms offer schemes and only 735,000 people, 3% of the workforce, are signed up. Of £9.3bn donated to good causes in 2011-12, £118m was via payroll giving.

The only organisations allowed to run schemes for businesses are charities. Of 12 active payroll-giving agencies the largest, the Charities Aid Foundation, has 80% of the market.

Charges for businesses are typically 4% of the money donated, which some firms pay themselves and others take out of employees’ contributions.

The Treasury is consulting on opening the market to other organisations, which it said could drive down costs and raise awareness.

It also wants workers leaving jobs where they are signed to receive “exit packs” including forms they can take to their new employer in order to continue their payments.

Among those that could get involved are JustGiving, an online fundraising firm. It charges charities £15 a month plus a fee of between 2% and 5% on every donation after gift aid, while donors pay card transaction fees of 1.3%. It reported profits of £1.4m in 2011.

Virgin Money Giving, which runs a rival non-profit-making operation, charges charities 2% on donations plus a one-off set-up fee, while donors face a fee of 1.45% on card payments. © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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