A group of Conservative backbenchers is urging the Treasury to rethink plans to include community investment tax relief in the government’s planned cap on tax relief for charitable donations.
Chris White, whose social value private member's bill became law earlier this year, and three other Tory backbenchers have written to the Treasury minister David Gauke to voice their concerns about plans to include CITR in the cap.
The National Council for Voluntary Organisations said last week it had received confirmation that CITR, which allows investors in some social enterprises to reclaim up to 25 per cent of the value of their investment over five years, would be included in the cap.
The cap, proposed in the Budget, will limit the amount of tax relief individuals can claim to a quarter of their income or £50,000, whichever is higher, from April 2013.
"CITR is a relief that is specifically targeted at our most disadvantaged communities and, since 2002, it has raised £70m for voluntary organisations, charities and social enterprises," says the letter, which is also signed by fellow Conservatives Richard Fuller, Fiona Bruce and Jeremy Lefroy.
"We believe that as a consequence of this decision there is a real danger that confusion will be created amongst potential investors into the social enterprise sector about the government’s intentions and the strength of the government’s support for its development."
Earlier this year, a private member’s bill put forward by White, which was designed to reform commissioning practice, gained royal assent. The Public Services (Social Value) Act requires local authorities to consider social value when procuring services.
A spokeswoman for the Treasury said: "The government will set out detailed proposals on how the relief cap will be implemented in a consultation during the summer. As part of developing any proposals, consideration will also be given as to the existing operation of affected reliefs."