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The reduction in the basic rate of tax, from 22% to 20%, has prompted HMRC to review its guidance for employers and employees on the operation of Payroll Giving schemes. Donations given by employees under payroll giving benefit from the “net pay arrangement”, whereby donations to charities are deducted from gross pay before tax (but not before NICs). As a result, the actual cost to the employee, measured by the effect of the donation on the employee’s net pay, is less than the amount deducted from gross pay.

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Posted May 19th, 2008 | No Comments »