smallbusiness.co.uk: Helping your business think big

It costs businesses nothing, can raise millions of pounds for charities and there’s even the possibility of a grant to help set it up, but the Give As You Earn scheme is being under-used as it seems too good to be true.

Mike Crellin, a tax manager at accountancy group UHY Hacker Young, is calling for greater take-up of the payroll giving scheme that allows employees to contribute to charity from their gross pay, rather than net, thereby costing them less.

For example, an employee donating £10 a month to their favourite charity would only effectively need to pay £7.80 if they pay standard rate tax. For a higher rate taxpayer, the cost would be just £6.

‘Payroll giving just hasn't taken off,’ explains the enthusiastic Crellin. ‘Too many bosses think it will cost them money and involve them in extra paperwork. This simply isn't the case, as administration is taken care of by bodies such as the Charities Aid Foundation.’

Businesses don't have to pay a penny in any format at all,’ he continues. ‘In fact, they will receive a government grant of up to £500 for setting up a payroll giving scheme.’

In addition, the Government will match donations for six months, so for every £10 donated, a charity would receive £20. Crellin believes that companies implementing the scheme can raise morale among staff and project a positive public image for themselves.

The £500 grant is available to businesses with fewer than 500 employees starting a payroll giving scheme for the first time. Those wanting more information should contact the Charities Aid Foundation.

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