Chancellor to Back Down on Charity Tax

Following heavy criticism from cabinet ministers and senior Tory MPs, it has been reported that the Chancellor, George Osborne, could soften his blow to charities in regard to his proposals on introducing a cap on tax relief for donations.

During the budget in March, the Chancellor announced his plans to bring in an annual cap of tax-free giving of £50,000 or twenty-five percent of an individuals earnings – whichever is the highest figure – from April next year.

However, following increasing pressure from those opposed to the idea; it is believed that the Chancellor will consider introducing the changes over a two or three year period, to give charities time to prepare, as requested by ministers.

Further signs that the Chancellor could be about to soften his stance on his tax relief proposals, came yesterday when the Prime Minister, speaking at a press conference during his tour of Indonesia promised he would “look very sympathetically” at the concerns raised by charities about losing big donations.

David Cameron said: “There’s no doubt abuse is taking place. Some people have been using charities established in other countries to funnel money into those so they’re not paying 50p tax or even 45p tax but in some cases are paying 10 or 20 per cent tax. I think that isn’t right.”

Despite David Cameron promising to look at the concerns raised by charities in regard to the tax relief cap, Downing Street sources denied that a climb-down had been issued, saying that the Prime Minister and the Chancellor were united in wanting to achieve the goals of increasing charitable giving whilst making sure the tax system isn’t abused; although it is thought the original proposals will now be “tweaked” in an attempt to allay the charities fears.