Paying your dues: should we be charitable to tax avoiders?

In the Budget, the Chancellor announced that a cap would be introduced on charity tax relief as part of a wider policy to clamp down on tax avoidance.

The Government argued that it was losing an estimated £50-100 million a year in tax revenue, with some wealthy individuals minimising their tax by making large donations to charities. Charity tax relief would, therefore, be capped at £50,000, or 25% of a person’s income, if that was higher, from 2013. Faced with significant opposition, the Government is now set to consult on whether and how this proposal should be implemented.

  • What will be the implications for charities of the Budget’s proposals to cap charity tax relief? Will it act as a break on philanthropy?
  • Who does charity tax relief really benefit: the high earner, the charity or the taxpayer?
  • Is there a case for individuals to be able to make private decisions to direct their tax contributions to charities?
  • How should the policy be revised before implementation?