SB: Urgent: At least £360 free money from government

koru

As I seem to have missed any previous publicity for what looks like a really good incentive for a really good scheme, I thought I would highlight it here.

The scheme is Payroll Giving, under which any employer (which includes companies with only one employee) can let employees make a voluntary charity donation out of their salary. The employer deducts it through the payroll and passes it to an organisation that coordinates passing the money to the charity nominated by the employee. The advantage is that the donation is out of pre-tax salary, so the employee forgoes £7.80 of net salary (£6 if they are higher rate taxpayers), but the charity gets £10. The difference is chipped in by the government, so you increase your donation by 28% or 66%.

Well worth doing, anyway, but particularly right now, as there are some good incentives which expire soon. First, you get a grant of at least £300. That's free money from the government, folks! (Which you could either keep or add to your donation. Either way, got to be better than letting the government keep it.)

Second, they match donations up to £10 per employee, for 6 months. So, employee forgoes 6x7.80= £46.80 of net salary and the charity gets £120.

More info here:
https://www.payrollgivinggrants.org.uk/

koru

Looks like sole traders can do this too.

Forms are here: http://www.cafonline.org/default.aspx?page=7287

Pennywise

A few clients have looked at this but I'm told the grants aren't as good as they look. I think the grants are "upto" the figures quoted and there are also administrative charges you have to pay the payroll giving company for handling the transactions - someone told me that the grant simply covers the admin charges for so many months, so there is no real "gain" at all for the employer, just an offset against the costs of running the scheme for a few months. That's not to say it isn't worthwhile as the employee benefits from the tax relief on the donation and the charity benefits from the Govt matching. But check it out as the employer seems to end up with an ongoing cost (albeit small and probably affordable) in fees to the agency handing the money. Of course, the agencies all charge different fees, so it is worth exploring several and comparing their fees. I havn't researched this personally in depth, so some or all of the above may be rubbish but perhaps worth checking out.

koru

Bigger employees get up to £500 grant, but the minimum is £300, even for an employer with one employee, and regardless of the actual costs incurred by the employer.

There are indeed some running costs. CAF, the charity I am using to receive and distribute the donations, charges 4% fee, which is 40 pence out of a donation of £10. This either comes out of the donation or the employer can opt to pay it.

In my case, we have two employees - my wife and I - and we both donate £10 per month. This will cost us £6 each in lost salary (after tax). So, over the next six months we as individuals jointly sacrifice 2x6x6=£72. CAF deduct fees of 2x6x0.4=£4.80, but claim matching donations from the government of 2x6x10=£120. In total, charities get 240-4.80=£235.60. I think it is fantastic to be able to turn £72 into £235.60.

The fees are therefore proportionately very small. And you incur them regardless of whether you apply for the grant. So, if you are going to do Payroll Giving anyway, may as well do it now and get £300 extra.

saubryn

Can you do payroll giving if you don't pay tax?

My husband and I just started a small business a couple of months ago - our income at the moment is so low we can still get full rate tax credits. It should improve, but not until Jan / Feb next year.

We were considering giving to some charities in our area of business, and anything that would increase the amount given without costing us any extra would be brilliant. A grant on top would really help too.

koru

If you think your income will pick up in Jan/Feb, be very careful about your tax credits. They look back at the end of the tax year and reconsider your credits based on your total income for the year. So, you could earn nothing for the first 9 months then earn well for the last 3 months and they would calculate the average for the year. HMRC will claw back credits if they decide your average income was higher than the income on which they initially based your credits.

If you don't pay any tax at all on your salary/earnings, then maybe you can't claim tax relief. Try phoning CAF for advice - see the link above.