Give as You Earn salary sacrifice - can give to any charity?

Krazeekat1471

Is there a limit to how much you can put into the Give as You Earn 'pot' to then assign to a charity?

I'm looking to start giving regularly to some chairites, however I presume there are lots of rules, but lots of things are registered charities now, including private schools. Can you use Give As You Earn to pay for school fees?? I am assuming the school would turn down such a thing and indeed there are rules/preventions to stop this happening?

Not sure where to ask this, but have done numerous google searches and can't seem to find any answers and surprised there's not something saying how this wouldn't work etc or others asking the same thing

Savvy_Sue

Never mind googling, go to the HMRC website. I cannot quickly find anything about limits, but obviously you must pay as much in tax as your donations.

As for school fees:

Can the charity provide any benefits in return for donations?

4.4.9 No, if a charity provides benefits (for example, free admission to properties or free or discounted tickets to events) in return for donations, the donations will not qualify for relief under Payroll Giving. However, HMRC would not regard items of negligible value, for example newsletters, stickers or badges, as benefits for this purpose.

From this page. So, if you wished to make charitable donations to your Alma Mater, you could do so, as long as these were not to cover a current student's fees.

My next point is that actually it's probably more beneficial to the charity if you give directly using Gift Aid. There will probably be an admin fee on the GAYE scheme, plus when your leave your donations will (obviously) stop until you get things organised with a new employer, who may or may not have a Payroll giving scheme. However, if you set up a Standing Order, you'll hopefully keep that going if you change jobs.

the charity I work for were considering promoting GAYE until I pointed out these slight drawbacks.

PlutoinCapricorn

I can confirm that the agencies through which payroll giving payments are made to charities do either take bites out of each donation or charge administration fees from time to time, also that charities often lose donations when someone changes jobs.

On the other hand, some big companies do match their employees' donations so charities can do well out of GAYE.

From the charity viewpoint, Direct Debits are the best form of regular gift; Standing Orders are good too.

Savvy_Sue

PlutoinCapricorn wrote: »

On the other hand, some big companies do match their employees' donations so charities can do well out of GAYE.

Fair point, which I had forgotten: if your company does match donations then definitely go for GAYE!

PlutoinCapricorn wrote: »

From the charity viewpoint, Direct Debits are the best form of regular gift; Standing Orders are good too.

I'd say that it's probably the larger charities who offer (encourage?) DDs, smaller ones can only accept SOs but will do so very happily!

Krazeekat1471

oh right, so there's no way for the charity to then claim gift aid also from any gifts made via GAYE - the saving is only for the person givng it rather than any extra benefit to the charity?

Thanks for the HMRC link - I assumed that there was some clause somewhere. Can go armed with info now

Savvy_Sue

Krazeekat1471 wrote: »

oh right, so there's no way for the charity to then claim gift aid also from any gifts made via GAYE - the saving is only for the person givng it rather than any extra benefit to the charity?

No, the charity cannot claim Gift Aid on top. In most circumstances, the charity will be better off if you give direct and Gift Aid.

PlutoinCapricorn

Strictly speaking, Give As You Earn is the scheme run by the Charities Aid Foundation (CAF): the generic term is Payroll Giving although many people do use GAYE as the umbrella term.

You are right in that PG makes things easy for the donor, however as already said, it is not always best for the charity. There are the overheads for two middlemen to be considered: the employer and the PG agency. If someone changes jobs, even if the new employer already has a PG scheme in operation, it might be with a different agency. This causes additional administrative overhead for the charity. Banks pay Standing Orders regularly, but some companies let the PG gifts pile up and send 3 month's worth at once, again an administrative overhead for the charity.

Some big companies do actually promote Payroll Giving, and they encourage their employees to give to a particular charity, matching the gifts themselves as part of their corporate giving activities. One huge bank I dealt with used to match by 100%! There was a time when the government added a top up to PG gifts, in an attempt to promote this type of charitable giving.

PG_works

I look after payroll giving as a source of income for a major UK charity and I can say that it is a great way to receive long term income. Large portion of our pg donors have given to us over 10 years, some even over 20 years. Cancellation rates are minimum especially compared to Direct Debits.

I am not sure what PlutoinCapricorn means by employer being a 'overhead' for a charity, only fee there is for the charity is the small admin fee that agencies such as CAF charge to distribute funds. This is normally appx. 4%, however there is a new player in the market that will not charge any fee. Quite a few employers also pay for this admin fee.

It is good to bear in mind that just because someone gives via direct debit there will be a fee that charity has to pay for the bank. Gift Aid does not magically appear on our bank accounts, it has to be claimed back by our employees, which naturally costs time and money. Unfortunately not everyone ticks box for Gift Aid, which means that charities loose hundreds of millions each year as they can not claim this back.

Simple way of making sure that charity receives Gift Aid portion back is to to for example give us £6.25 through PG: this will cost normal tax payer £5 and extra bit will be the same as we would be claiming were you giving via Direct Debit...

I would like to point out that numerous employers, not just banks, do match pg donations, which makes these donations go much further.

Payroll giving is also only way a higher rate taxpayer can pass all of their tax to charity as through Gift Aid we can only claim standard tax.

So please, do give to charity via payroll giving, we :heart2: it!

barak

PG_works wrote: »

I look after payroll giving as a source of income for a major UK charity and I can say that it is a great way to receive long term income. Large portion of our pg donors have given to us over 10 years, some even over 20 years. Cancellation rates are minimum especially compared to Direct Debits.

I am not sure what PlutoinCapricorn means by employer being a 'overhead' for a charity, only fee there is for the charity is the small admin fee that agencies such as CAF charge to distribute funds. This is normally appx. 4%, however there is a new player in the market that will not charge any fee. Quite a few employers also pay for this admin fee.

It is good to bear in mind that just because someone gives via direct debit there will be a fee that charity has to pay for the bank. Gift Aid does not magically appear on our bank accounts, it has to be claimed back by our employees, which naturally costs time and money. Unfortunately not everyone ticks box for Gift Aid, which means that charities loose hundreds of millions each year as they can not claim this back.

Simple way of making sure that charity receives Gift Aid portion back is to to for example give us £6.25 through PG: this will cost normal tax payer £5 and extra bit will be the same as we would be claiming were you giving via Direct Debit...

I would like to point out that numerous employers, not just banks, do match pg donations, which makes these donations go much further.

Payroll giving is also only way a higher rate taxpayer can pass all of their tax to charity as through Gift Aid we can only claim standard tax.

So please, do give to charity via payroll giving, we :heart2: it!

My [large] company encourages Payroll Giving for employees [and pensioners], by matching the first £25 given per month and also paying the 4% admin. fee.

Mine is paid into a CAF GAYE account, so that I can choose which charities I want to support using CAF vouchers, CAF card or online donation.

Krazeekat1471 - I hope you understand that the amount donated through Payroll Giving is deducted before tax, so the donor has the equivalent of a taxed donation plus Gift Aid to give.