When George Osborne announced a cap on tax relief in the Budget last month, the so-called “tycoon tax” was supposed to be a populist measure. Under the plans, previously uncapped tax reliefs – including those on charitable donations – would be capped at £50,000 or 25 per cent of income, if higher. Supposed to be a way of clamping down on legal methods of tax avoidance, it clearly it hasn’t quite worked out as hoped, with the government under a hail of criticism for limiting charitable giving.
It appears that the storm is far from over, with a ComRes poll finding that two-thirds (65 per cent) of government backbenchers believe that tax relief on charitable donations should be exempt from the cap. The survey, commissioned by the Charities Aid Foundation, found that 68 per cent of the Conservative and Liberal Democrat MPs surveyed believed that the government should review its proposal to cap tax relief on charitable donations. It also showed that 93 per cent of coalition backbenchers believed that the government “should do all it can to use the tax system to encourage charitable donations from wealthy donors”.
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