Chancellor, George Osborne has recently scrapped plans to cap tax relief on charitable donations. This follows a warning from charities that they stood to lose a significant proportion of the £1.4 billion of donations on which relief is claimed each year. In addition, Conservative MPs complained that the measure did not fit with the Government's policy of promoting volunteering through the Big Society idea.
The cap, limiting tax relief at £50,000 or 25% of income (whichever is higher), was proposed in Mr Osborne's March 21 Budget and was expected to save the Treasury £50-£80 million a year.
Mr Osborne has now written to representatives of the charities sector to tell them he was ditching the cap proposal, while pressing ahead with limits on other income-tax reliefs for the wealthy.
Speaking about the u-turn, the Chancellor said: "I can confirm that we will proceed next year with a cap on income tax reliefs for wealthy people but we won't be capping relief for giving money to charity.
"It is clear from our conversations with charities that any kind of cap could damage donations and, as I said at the Budget, that's not what we want at all. So we've listened."
Charities said they were delighted that the Chancellor responded to their 'Give It Back, George' campaign, which was supported by more than 1,000 voluntary sector organisations. Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations (NCVO), hailed the decision as "a victory for common sense."
The reported £50-£80 million cost of the decision follows the £70 million hit on the Treasury from recent decisions to drop the "pasty tax" on hot snacks such as pasties sold at above room temperature, and to abandon proposed VAT charges on static caravans. These three recent change announcements seem also to have encouraged pressure for further legislative changes, including:
- Campaigns against new regulations allowing nests of the endangered buzzard to be destroyed and the birds to be taken into captivity to protect pheasant shoots;
- Campaigns against the "conservatory tax", a proposed requirement to invest in energy saving measures such as insulating lofts and walls when home owners built an extension;
- Campaigns from waste companies who are protesting against a massive hike to the landfill tax for some rubble-type waste and grit, which was recently introduced without warning by HMRC.