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31 May 2012

Christian group welcomes charity tax turnaround

Christian giving charity Stewardship has welcomed the government's announcement to drop plans to limit tax relief on charitable giving.

The original plans, announced at the budget speech in April, proposed that as of April 2013, relief would be limited to the tax on £50,000 of charitable giving, or a quarter of the donor’s income, whichever is greater.

But, following today’s turnaround, the government has announced that there will be no cap imposed – as existed before the budget – on big charitable donations.

Chancellor George 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 of cap could damage donations, and as I said at the Budget that’s not what we want at all. So we’ve listened.”

Following the chancellor’s original proposal of the controversial tax cap, donor-advised charity Stewardship published figures showing how the proposed measure would impact charitable giving, revealing that it could lose up to £11 million each year if donor's giving patterns were to change as a result.

Kevin Russell, Stewardship's technical director and vice-chair of the charity tax group, said:
“We are delighted that the government has listened to the representations of Stewardship and others within the sector and has recognised that the proposed cap on charitable reliefs would create a huge risk to the charitable sector.

“It is a credit to the charitable sector as a whole that this u-turn has taken place. Charities across the UK have united in order to defend and protect their future, to ensure this ill-conceived and potentially damaging measure was reversed."

The Treasury has announced that they will write to the charitable sector later confirming the new position.