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February is Payroll Giving Month - but what exactly is it?

24th Feb 2023
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Running payroll can sometimes be a thankless job, full of deadline gloom and penalty doom. So that’s why February is always a great month, because we get to celebrate something awesome that happens in the world of payroll. 

Yes, February is Payroll Giving Month! What is it? No, it’s not giving payroll duties to the unsuspecting intern. It’s a month to spread awareness about donating money to charities through Payroll Giving. Payroll Giving is a simple, tax-effective way for employees to give directly to charity from their pay. It’s a scheme that allows employees to donate on a regular and tax-free basis to the charities of their choice. 

Payroll Giving is a valuable and long-term source of revenue which provides regular income to charities. It helps them plan ahead and budget more effectively. Did I mention it’s tax free! Donations are deducted after NIC but before tax is applied. Donations then need to then be transferred to a Payroll Giving Agency each month. A Payroll Giving Agency is an organisation that donations need to be transferred to before they are passed on to the chosen charity. All Payroll Giving Agencies are approved by HMRC to ensure a secure transaction. 

How to make deductions from employee’s pay under Payroll Giving  

If your clients have employees who would like to make donations through Payroll Giving, your clients will need to have set up a scheme with an approved Payroll Giving agency. All the employee needs to do is fill out a form with the information about the donations they wish to make and give consent for the donations to be made from their pay. There may be administration fees that your client will need to pay to the agency.  

If you are using payroll software BrightPay to process payroll for your clients, the software has a “payroll giving” deduction pre-programmed into the software. When you add the donation amount, it will automatically be added as a tax allowable deduction.  

So, what’s so special about February (apart from my birthday)? Well, it’s just after Christmas and tax return season where people don’t feel as despondent about things, coupled with New Year cheer and lists of New Year resolutions that have probably gathered dust by now. So, in February charities, payroll processors, Giving Agencies and businesses come together and make a special effort to raise awareness of Payroll Giving. 

New for the 2023/24 tax year is BrightPay’s cloud-based payroll software. Join our webinar on February 28th at 3:00 pm where we will discuss the benefits of using our brand-new cloud payroll software and see the software in action! 

 

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Written by Aoibheann Byrne | Bright

BrightPay by Bright

 

 

 

 

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