Payroll-giving agencies will have to pass donations to charities within 35 days

But government plans to allow commercial companies to become agencies are scrapped, according to the Treasury's response to a consultation

The government is to reduce the time that payroll-giving agencies have to pass donations to charities from 60 to 35 days as part of measures aimed at improving take-up of the scheme.

The Treasury has today published its response to a consultation carried out earlier this year into how payroll giving could be improved.

The response says that it will also create improved web pages on the website to give more information about the scheme for donors, employers, charities and payroll-giving agencies, which run payroll-giving schemes.

It will also promote payroll giving across the public sector and says it will be hosting a series of working groups involving charities, payroll-giving agencies and other stakeholders to consider further improvements to the process.

But it says the government has shelved plans to allow commercial companies to become payroll-giving agencies, a role that is currently restricted to charities, because it would "not have a transformative effect" on the payroll-giving market.

It also confirms that the government will not make offering schemes mandatory for employers, as ministers have already indicated.

Voluntary sector organisations said the proposals fell short of what was needed to transform the scheme.

A statement from the Charity Tax Group said: "While a number of the proposals outlined by the government are welcome and will have a positive impact on payroll giving take-up, we feel that the government has missed the opportunity for a more radical approach than was set out in the consultation document.

"We believe that more needs to be done to give charities greater control over donor relationships through payroll giving. There also needs to be a much greater effort by the government to influence take-up by big businesses, particularly at senior management level."

Rhodri Davies, head of policy and campaigns at the Charities Aid Foundation, itself a payroll-giving agency, said the changes were disappointing.

"If we want to make payroll giving work, we need to make some radical changes," he said.

He said more needed to be done to bring together the back-office functions for processing payroll giving in order to make the scheme more portable for employees.  

"It is a shame because an opportunity like this will probably not come around again for some time," said Davies.

He said that plans to speed up the time that payroll-giving agencies have to pass on money to charities might not have much effect because many payroll-giving agencies already aimed for a 30-day turnaround on donations.

Nick Hurd, the Minister for Civil Society, said: "These are useful steps in making payroll giving work better for donors, employers and charities. They are part of our broader strategy to make it easier and more compelling to give."

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