Regulations have been introduced in 2000 to remove the upper limit for payroll giving, and to pay the 10% supplement to donations. Before the current tax year, the annual limit was £1,200 a year. This has now been removed.
Payroll giving allows an employee to have a charitable donation deducted from his gross pay which, in effect, provides tax relief at source. There is no relief from employer’s or employees’ national insurance which is calculated as if there had been no payroll deduction. In effect, the government is still imposing a net tax of 12.2% on payroll giving.
The employer pays sums deducted to an agency which must distribute the money to the charities nominated by the employee. Payroll giving is entirely optional. An employer does not have to operate it, no employee has to join, and no charity has to agree to act as agent.
Separate regulations reduce the threshold for Gift Aid which allows donations, however small, to have the tax reclaimed by the taxpayer completing a simple declaration.
[2000]