Charities welcome Osborne’s tax u-turn

Controversial plans to limit the tax reliefs that can be claimed on charitable donations have been scrapped by Chancellor George Osborne, following huge pressure from charities.

The Chancellor had proposed the limit on tax relief on gifts to good causes – which would have capped relief at £50,000 or 25 per cent of income – in his March Budget. (You can read more about the plans here.) Ministers defended the change by saying it would prevent “abuse” of the tax code that allows very wealthy people to unfairly reduce their tax liabilities.

However, the plans sparked massive protest from charities and voluntary organisations, who warned the government that the change would result in a significant decrease in philanthropic giving.

Announcing the decision last week, Osborne 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 cap could damage donations, and as I said at the Budget that’s not what we want at all. So we’ve listened.”

Charities across the UK said they were delighted with the government’s announcement. While it had been expected that ministers would hold a consultation this summer, with a verdict to be given in the autumn, a vigorous Give It Back George anti-charity tax campaign, supported by more than 1,000 voluntary sector organisations, is believed to have convinced the government to back down on the issue.

Many Conservative MPs had also campaigned against the move, arguing that it undermined the government’s policy of promoting volunteering through the ‘Big Society’.

We welcome the government’s pledge to drop the proposed charity tax.  Many charities rely on large donations from those wanting to give money for the greater good; it is likely that the limit would have undermined these individuals and organisations, and many charities’ ability to deliver high quality services to those in need – particularly in the current economic climate.

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