Independent review finds Payroll Giving should be mandatory

Peter O'HaraThe NCVO have released their report reviewing the impact of the tax system on charities and mandatory Payroll Giving is at the heart of their findings. The independent review was undertaken by the Charity Tax Commission, chaired by Sir Nicholas Montagu, a former chair of the Inland Revenue.

The report found that ‘Tax reliefs offered to UK charities urgently need an overhaul.’ These overhauls would not involve much public spending but could help charities to benefit from the £560m of Gift aid that goes unclaimed each year.

The new report sets out a number of recommendations, including offering Payroll Giving schemes as mandatory, enabling employees to give to charity out of their pre-tax income. ‘The government should insist on employers offering this to their staff, much as they have done with pension auto-enrolement.

This is welcome news for The Geared for Giving Campaign as we have been speaking to the government about looking into making the scheme mandatory for the past 12 months, and would like to see this come into effect for those employers with more than 250 UK employees as soon as possible.

Sir Nicholas Montagu says, ‘Every day, millions of people give money to charities of all shapes and sizes. This enables them to do so much to strengthen our communities, protect our heritage, look after our environment and provide essential services to our fellow citizens.

With the continuing strain on the public finances forcing the retreat of the state from it’s universal funding role in many areas, charities often pick up the slack.

This would be impossible without the financial support tax reliefs provide as well as the extraordinary work done by so many dedicated volunteers and professional staff.

The commission set out to ask whether the tax system could be better employed not just to help protect existing giving but also to encourage a new wave of philanthropy. The answer is a clear ‘yes’.

Peter O’Hara, Founder of The Geared for Giving campaign adds, ‘If this came into force tomorrow it could raise millions more for good causes as it would provide an extra 6.5 million PAYE employees with access to Payroll Giving. We really welcome this report as it provides further evidence there is an appetite to explore this concept further and we will be working across the charity and business sector to gain support of this idea in the Autumn.

The full report can be found at www.ncvo.org.uk/tax.

You can find out more and get signed up to Payroll Giving here.