Donations which people make to charity through the pay packet could reach their chosen charities sooner under Regulations laid by the Treasury today. (SI No. 759 2000)
Commenting on the improvement in the Payroll Giving scheme, Economic Secretary to the Treasury, Melanie Johnson said:
“This is the next step towards making Payroll Giving a greater success. I have already announced that the Government’s campaign to double the amount of money given to charity through Payroll Giving will start this summer. The change we are making today will mean that donors can be confident that their donations will reach their chosen charities without delay.”
From 6 April the agencies that distribute Payroll Giving donations to charities will for the first time have to distribute them within a set period. Agencies will have up to 60 days in which to make the distribution to the charities chosen by donors.
1. Payroll Giving agencies are regulated under the Charitable Deductions (Approved Schemes) Regulations 1986 (SI 1986/2211). Regulation 9(3) provides that where an agency does not distribute donations within 90 days of their receipt, the Inland Revenue may require the agency to explain why it has not done so.
2. Regulations laid today, The Charitable Deductions (Approved Schemes) (Amendment) Regulations 2000 (SI No. 759/2000), tighten these rules. In future, agencies will be required to distribute donations within 60 days of receipt of the donation or the donor’s nomination of his or her chosen charity, whichever is the later. Where an agency fails to distribute donations within the time limit, it will be required to inform the Inland Revenue and explain why it has not done so.
3. The new Regulations will come into force on 6 April 2000.
4. The Chancellor, Gordon Brown, announced the following further measures to improve Payroll Giving in his Pre-Budget Report on 9 November 1999:
removal of the 1,200 pounds ceiling on the amount that a donor can give under the Payroll Giving scheme in any tax year
backing the promotional campaign to boost the take-up of the Payroll Giving scheme, a 10 per cent supplement on all Payroll Giving donations for three years.
5. Legislation to give effect to these further measures will be contained in the forthcoming Finance Bill and subsequent Regulations. Both measures will take effect from 6 April 2000.
NOTES FOR EDITORS
1. The change to the Payroll Giving Regulations is part of the Getting Britain Giving package of measures for charities, announced by the Chancellor in the Pre-Budget Report last November (HM Treasury 8 of 9 November 1999). Other measures will be included in the forthcoming Budget and Finance Bill, and will take effect from April 2000.
2. Payroll Giving is an easy and effective way in which employees (and pensioners in employer’s occupational pension schemes) can give to charity. Employees authorise their employers to deduct donations from their pay. Because donations are deducted before Pay As You Earn tax is calculated, employees get full tax relief at their highest rate of tax. Employers then pass on the donations to an Inland Revenue-approved agency, which in turn distributes the donations to the charities chosen by the employees.
3. It is not compulsory for employers to offer Payroll Giving schemes but many do so because the scheme promotes good employer-employee relations and develops links between the employer’s business and the local community.
4. Although charitable donations through Payroll Giving have been increasing in recent years, research carried out last year as part of the Government’s review of charity taxation showed that it still has low take up, with only 1% of employers offering schemes. But 21% of the population said they would or might join the scheme if it was offered to them. And over a third of employees already taking part in Payroll Giving said they would increase their donations if asked to do so.
5. The Inland Revenue has produced two new Payroll Giving guides for employers and employees, the text of which is available on the Inland Revenue website at www.inlandrevenue.gov.uk
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