Charity tax

  • Tax changes could strangle major donations, says charity – Charities Aid Foundation, 21 Mar 2012
  • Government confirms u-turn on charity tax – The Guardian, 31 May 2012

In the March budget, George Osborne announced changes to tax relief, dubbed the “charity tax” – to the anger of charities.

The Charities Aid Foundation reported:

Major philanthropists may be put off making substantial donations to charities because of changes unveiled in today’s Budget.

Under changes to tax relief announced by the Chancellor, those wanting to make major lump sum donations could be hit by lower tax relief on donations of more than £200,000.

Following the announcement, the Charities Aid Foundation (CAF) has called for urgent talks with the Treasury to ensure caps on tax relief announced in the budget do not strangle major donations by wealthy philanthropists.

CAF fears that the changes could reduce the amount donated to charity by millions of pounds each year.

The government has now u-turned on the charity tax, as The Guardian reports:

George Osborne has announced his third u-turn over his budget this week by scrapping “charity tax” proposals that sought to remove tax breaks from wealthy donors to good causes…

The Treasury said it would go ahead with a proposed cap on tax relief – which is to be set at 25% of income or £50,000, whichever is greater – but that it would no longer include donations to charity. The main component of the cap will now be the amount of previous business losses that can be offset against future taxable profits.

Officials said the decision was not a u-turn, but the conclusion of a consultation the government promised as soon as it announced the measure in the March budget.

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