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?