Small businesses are being offered £500 to set up a payroll charity giving scheme, ministers announced today.
The government incentive will encouraging firms to give staff the chance to make charitable donations direct from their salary, with each donation including up to 40% tax relief.
The programme will also match the first £10 donated by each worker, every month, for six months.
Grants are payable to organisations with under 500 employees that sign up to Payroll Giving by the end of 2006. It can also be backdated for those that have set a scheme up since 6 April 2004.
Ministers are hoping that the new incentives will help spread the word among employers about the benefits of payroll giving.
Although £91 million was raised in this way during 2003-2004, only 1% of UK firms currently offer the scheme.
Fiona Mactaggart, Home Office Minister, said: "Payroll giving makes it easy for people to give money tax-efficiently because donations are made before tax is deducted from a employee's salary.
"Charities also benefit from regular, reliable funding and it gives businesses the chance to connect with their local community."
Tina Steele, project manager of the Payroll Giving Grants programme, added: "This new grants programme is intended to give even the smallest organisations, with minimal budgets, the chance to play their part."
With charities currently hitting the headlines as a result of the tsunami disaster in south east Asia, today's initiative is the latest in a range of schemes encouraging small firms to do their bit.
This year has been declared the 'Year of the Volunteer' and the 'Make a difference day' on October 26 gives businesses the opportunity to improve their local area through volunteer work
