There are currently 14 MPs engaged in the Give-as-you-earn (GAYE) programme, according to data obtained by Civil Society News through a freedom of information request.
Donations through the GAYE scheme are taken from your pre-tax pay, making it tax-effective.
Philippa Cornish, head of corporate clients at Charities Aid Foundation (CAF) explained employees can use GAYE, CAF’s payroll giving scheme, to set up charitable donations directly from their wages to charities of their choice.
She said: “Payroll giving works in a similar way to salary sacrifice and saves the charity administrative costs, since they do not need to claim back the tax paid through Gift Aid – it is included in the donation.”
Roughly 2% of MPs use payroll giving
The basic annual salary for an MP from 1 April 2022 is £84,144. MPs also receive expenses to cover the costs of running an office, employing staff, having somewhere to live in London or their constituency, and travelling between parliament and their constituency.
The Independent Parliamentary Standards Authority (IPSA), which has set and administered MPs' pay since 2011, confirmed eight Conservative, four Labour and one SNP MP use the payroll giving scheme.
The UK is currently divided into 650 parliamentary constituencies, and one MP in the House of Commons represents a single constituency. Therefore, about 2% of MPs use payroll giving.
It has been estimated that about 80% of companies do not offer payroll giving, and around 4% of UK employees use it.
IPSA noted there are many different ways of donating to charity, and states it would not necessarily know if an MP was making donations to charity once they had received their salary.
‘Payroll Giving is a chronically under-utilised form of tax relief’
Nicole Sykes, policy and communications director at Pro Bono Economics, said: “At a time when demand for charitable services is high and income is lagging, better use of Payroll Giving could boost donations and help alleviate some of the cost of living pressures on charities.
“Currently, Payroll Giving is a chronically under-utilised form of tax relief, which has seen very little change in annual donations in recent years.”
Sykes said “it has potential to work harder”, and a Philanthropy Champion in government could “help unlock that potential”, as called for by the Law Family Commission on Civil Society and Beacon Collaborative.
She added: “With businesses more focused on purpose than ever before and keen to honour the ‘S’ in ESG, there is a real opportunity to encourage more companies to take up Payroll Giving and increase charity donations at this critical time.”
Cornish noted CAF recently awarded clients with a government backed accreditation in the form of a ‘Payroll Giving Quality Mark’, which is based on the percentage of employees giving through CAF’s Give As You Earn scheme from their workforce.
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