Today the Treasury launched a  consultation on a range of measures it believes will increase take-up of the system that allows UK income taxpayers to make regular donations, tax free, from their earnings.

These include allowing private companies to become payroll-giving agencies and operate payroll-giving schemes for other organisations, a role that is currently reserved exclusively for charities.

The document says that in the past decade new non-charitable organisations have emerged and "changed the landscape of giving" by introducing new ways of donating and applying their "commercial acumen" to fundraising. A Treasury spokeswoman said the government wanted to hear from companies such as Virgin Money and JustGiving, which have previously expressed interest in running payroll giving.

The government believes that payroll giving will be improved by widening the market. Increased competition among payroll-giving agencies would, it says, drive down processing fees and raise standards.

The consultation proposes reducing the processing time from 60 days to 30 so that charities would get donations faster. It says payroll-giving agencies, which have contracts with employers to provide the schemes, should be transparent about the cost of processing donations.

Other proposed changes include the provision of an exit pack when an employee stops giving to the scheme, which explains how they can maintain a relationship with their chosen charity. The consultation document suggests introducing standardised forms to make sign-up simpler for donors.

In 2011/12, £118m was given to good causes by 735,000 people through payroll giving. But only 2 per cent of employers offered payroll-giving schemes and just 3 per cent of employees donated through them.

The Consultation closes on 19th April 2013.