A Guide to Giving - Engaging Employees

How can you support staff who want to help? FInd out more about employee volunteering, employee secondments and payroll giving.

There are many ways to help charities. Our advice is that you set up ways to help now, so that when an emergency happens you and your staff can act quickly. How can you help? Make donations, donate your time, link your marketing to the cause, organise an event, or make a gift of your product or services.

Employee Volunteering - What is it?

Employee volunteering is a partnership between the company, employee and the receiver of these volunteers (in this case, a charitable organisation). Employee Volunteering delivers clear benefits for companies, employees and communities. As an employer, implementing a successful volunteering scheme in the workplace can help develop skills and raise morale in the workforce as well as building important partnerships with business and the public sector.

Employee Volunteering - How Do I Set It Up?

For more information about setting up an employee volunteering scheme you can access information and case studies at Business in the Community’s website at www.bitc.org.uk/employeevolunteering or Volunteering England’s website at www.volunteering.org.uk

Employee Secondments

If any of your employees are seconded to a charity or a school, and your business continues to pay their salary, you can deduct the costs associated with employing that person as if they had continued to work for you normally. This applies whether the person is undertaking voluntary work within the charity or school for a period of weeks of months, an odd day, or just a few hours on a regular basis, or whether they are involved as a volunteer or mentor as part of the activity of the charity or school. This applies to sole traders, trading partnerships and companies with a trading or investment business.

All you need to do is treat the costs incurred in connection with the secondment (for example, the relevant proportion of the person’s salary) as a normal business expense when your business is calculating its profits for tax purposes.

Payroll Giving

Your business can consider setting up and promoting a Payroll Giving scheme. In 2007-08, 717,000 employees gave approximately £109 million to charity in this way. Payroll Giving is an excellent way for employees to make regular
donations, of any amount, to the charities they personally support. Tax relief is given directly to donors by deducting the donation from gross pay before tax is calculated, thus reducing the donor’s overall tax bill. The amount of relief donors receive will therefore depend upon whether they are higher or standard rate taxpayers. For a higher rate taxpayer, a £10 donation costs just £6 and for a standard rate taxpayer, the same donation costs £8.

The costs to your business of setting up a Payroll Giving scheme are minimal and all businesses can claim tax relief on the costs of setting up and running a scheme. If your business chooses to match your employees’ donations, that gift to charity can be treated as a donation in the normal way and tax relief claimed under Gift Aid (see page 3). Your business must have a contract with an HMRC approved Payroll Giving Agency before deducting donations from pay.

Your employees indicate, on a simple form, which charities they want to support and how much they want to give. Donations are deducted from their [gross] pay before deducting income tax under PAYE and a Payroll Giving Agency distributes the donation to the charity chosen by your employee.

There is a lot your own business can do to increase the number of your employees involved in Payroll Giving. Research shows that Payroll Giving can be really successful as part of an effective employee communication programme.

Individual employees can give in all sorts of other ways tax effectively as well, including making one off or regular donations using Gift Aid.

What Are the Benefits of the Scheme?

  • Enhances Corporate Social Responsibility/Corporate Community Investment profile.

  • The Government has recently announced that it will provide small and medium-sized companies with a cash incentive for setting up a Payroll Giving scheme for employees.

  • Boosts employee morale and sense of team-building, and therefore can aid staff retention.

  • Aids recruitment (increasingly, graduate applicants ask about the social responsibility and ethical profile of businesses).

  • Complements existing volunteering or charity adoption schemes by offering employees a structured "no hassle" donation system.

  • Donations to the charities are administered by a payroll giving agency.