The government has published legislation that will reduce from 60 to 35 days the time that payroll-giving agencies have to pass donations to charities.
The measure was among those set out in the Treasury’s response to last year’s consultation on how take-up of the tax-free giving scheme could be improved.
The legislation, which will come into force on 6 April, is an amendment to the Charitable Deductions (Approved Schemes) Regulations 1986 and was laid before parliament yesterday. It was introduced as a statutory instrument, which allows laws to be amended without the need for a new act.
The new legislation says that payroll-giving agencies must pay employees’ donations to their charity of choice within 35 days of receiving them.
It is aimed at speeding up the payroll-giving process so that charities are able to access the money donated to them more quickly.
But Peter O’Hara, managing director of Workplace Giving UK, a professional fundraising organisation that promotes payroll giving, said the move was a "red herring" because it would not increase donations.
"It’s just a smokescreen – this change is not going to increase payroll giving," he said. "The work we did in the run-up to the consultation found that 80 per cent of donations were already passed to charities within 30 days.
"If the agency has not received the money from the employer, how can they pass it to the charity? The legislation does not tackle that area."
O’Hara said take-up of the scheme would improve if a central registry of all employers offering the scheme was available to employees and if the government was to provide clarity about online sign-ups to payroll giving.
Under existing regulations it was up to individual employers whether staff could sign up to the scheme online, he said.
The Treasury said yesterday it was working with the sector on other measures outlined in its consultation response, including improving payroll giving’s online presence and introducing a service-level agreement between payroll-giving agencies and charities to improve transparency and confidence in the scheme.
Nicky Morgan, Economic Secretary to the Treasury, said: "The government is strongly supportive of payroll giving, and I am delighted that we are able to introduce the legislation today to enable this to come into effect in April."This is part of the government’s wider strategy to make it quicker for charities to access their donations."