The proposed cap on ‘unlimited tax reliefs’ will not apply to donations to charity, George Osborne has announced.
The Chancellor told Sky News that the government had listened to charities. ‘Any kind of cap would have potentially damaged donations to charities, so we’re not going to do that,’ he said.
Asked whether the decision meant that he ‘got it wrong’ in the March Budget, Osborne said: ‘We said would listen and we said we didn’t want to damage charities. Any kind of cap would have damaged donations to them, so we’ll go ahead with the cap on other reliefs that wealthy people can claim [against] income tax but not [on money given to charity].’
Budget 2012 announced that the amount of income tax relief available to individuals would be capped from April 2013. The cap would be set at 25% of income, or £50,000 if greater. But the government would ‘explore with philanthropists ways to ensure this new limit of uncapped reliefs will not impact significantly on charities that depend on large donations’.
Last month Osborne said he was ‘shocked’ to see that some the UK’s wealthiest people had organised their tax affairs, within the law, so that ‘they were regularly paying virtually no income tax’.
‘Delighted’
John Low, Chief Executive of the Charities Aid Foundation, said: ‘We are delighted that the government has responded to the challenging calls from philanthropists and charities across the country and taken the bold decision to exempt charitable donations from the cap on tax relief.
‘We realise the government is responding to truly exceptional financial circumstances and is having to make tough decisions about public finances. We acknowledge and welcome the Chancellor’s decision to do the right thing and exempt charity donations from the cap. We thank ministers for the support they have shown to charities large and small, which are so vital to the health of our country.’
Francesca Lagerberg, Head of Tax at Grant Thornton, said many charities would breathe a sigh of relief that ‘their wealthy benefactors will still be incentivised to give large sums, which in some cases are essential to keep the charity viable’.
She added: ‘By taking the sting out of this issue even before consultation, the Chancellor is looking to put this matter behind him but he still remains committed to capping income tax reliefs where no cap currently exists.’
Other reliefs
Alex Henderson, Tax Partner at PwC, suggested a review of the ‘original intent’ of the reform. ‘The remaining reliefs affected relate to setting up and running unquoted businesses,’ he said. ‘These changes could have an unintended impact on business growth and job creation.’
HMRC indicated last month that ‘the principal reliefs affected’ would be loss reliefs claimed against total income, qualifying loan interest relief and reliefs for charitable giving. ‘There will also be a number of smaller reliefs which are currently uncapped that will be affected,’ HMRC said.
The proposed cap on ‘unlimited tax reliefs’ will not apply to donations to charity, George Osborne has announced.
The Chancellor told Sky News that the government had listened to charities. ‘Any kind of cap would have potentially damaged donations to charities, so we’re not going to do that,’ he said.
Asked whether the decision meant that he ‘got it wrong’ in the March Budget, Osborne said: ‘We said would listen and we said we didn’t want to damage charities. Any kind of cap would have damaged donations to them, so we’ll go ahead with the cap on other reliefs that wealthy people can claim [against] income tax but not [on money given to charity].’
Budget 2012 announced that the amount of income tax relief available to individuals would be capped from April 2013. The cap would be set at 25% of income, or £50,000 if greater. But the government would ‘explore with philanthropists ways to ensure this new limit of uncapped reliefs will not impact significantly on charities that depend on large donations’.
Last month Osborne said he was ‘shocked’ to see that some the UK’s wealthiest people had organised their tax affairs, within the law, so that ‘they were regularly paying virtually no income tax’.
‘Delighted’
John Low, Chief Executive of the Charities Aid Foundation, said: ‘We are delighted that the government has responded to the challenging calls from philanthropists and charities across the country and taken the bold decision to exempt charitable donations from the cap on tax relief.
‘We realise the government is responding to truly exceptional financial circumstances and is having to make tough decisions about public finances. We acknowledge and welcome the Chancellor’s decision to do the right thing and exempt charity donations from the cap. We thank ministers for the support they have shown to charities large and small, which are so vital to the health of our country.’
Francesca Lagerberg, Head of Tax at Grant Thornton, said many charities would breathe a sigh of relief that ‘their wealthy benefactors will still be incentivised to give large sums, which in some cases are essential to keep the charity viable’.
She added: ‘By taking the sting out of this issue even before consultation, the Chancellor is looking to put this matter behind him but he still remains committed to capping income tax reliefs where no cap currently exists.’
Other reliefs
Alex Henderson, Tax Partner at PwC, suggested a review of the ‘original intent’ of the reform. ‘The remaining reliefs affected relate to setting up and running unquoted businesses,’ he said. ‘These changes could have an unintended impact on business growth and job creation.’
HMRC indicated last month that ‘the principal reliefs affected’ would be loss reliefs claimed against total income, qualifying loan interest relief and reliefs for charitable giving. ‘There will also be a number of smaller reliefs which are currently uncapped that will be affected,’ HMRC said.
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