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Payroll giving reform must work for today's employees

25 January 2013

Reform of the scheme that allows people to give to charity direct through their payroll must ensure that it really works for today's companies and employees, the Charities Aid Foundation (CAF) said today.

CAF, which pioneered the concept of giving through the payroll and is Britain’s largest provider, through its CAF Give As You Earn scheme, said it was determined to work with ministers, charities and private sector organisations to realise the huge potential of Payroll Giving to help people commit to regular giving.

A Government consultation proposes a number of changes to the system including opening up the market to non-charities, introducing requirements around transparency and reducing the time payroll giving agencies can take to distribute the donor's money.

CAF, which promotes charitable giving and provides financial services and social finance to not-for-profit organisations, has led the debate on the future of payroll giving, calling for reform to make payroll giving schemes fit for modern workplace and the way people work today.

A study published by CAF last month - The journey so far - found only 1.9% of the under 30s in employment give through the payroll compared with 4.5 % of employees aged between 30 and 49. Last year (2011/12) £118 million was given to good causes by 735,000 people through their payroll, equivalent to 3% of employees.

Under the scheme, introduced in 1987, employees can arrange for their employers to make charity donations from their gross pay before tax is deducted. For higher rate taxpayers this means £55 donated from net pay will become a £100 donation.

John Low, Chief Executive of the Charities Aid Foundation, said: “It is excellent news that the Government is committed to making this important tax relief scheme work. With the right reform, Payroll Giving can play a huge part in encouraging more people to give and increasing the vital funds reaching charities at a time when demand for their work is higher than ever.  

“CAF pioneered the concept of payroll giving. We have been pushing for some time for more radical modernisation of the scheme, so that charities and the people they support can fully benefit.

“We are committed to working with the Government, charities and the private sector to realise the huge potential of these schemes to help people give regularly and support the causes they care about.”

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