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Former philanthropy ambassador urges government to drop cap on tax relief

Dame Stephanie Shirley says the plans to cap relief for charitable giving are "vague and ill-considered"

Dame Stephanie Shirley
Dame Stephanie Shirley

Dame Stephanie Shirley, the former philanthropy ambassador, has called on the government to abandon the "naive and ill-considered" proposals to place a cap on tax reliefs for charitable giving.

George Osborne, the Chancellor of the Exchequer, announced in the Budget that from 2013 the government would cap the amount of tax relief an individual can claim in any year to a quarter of their income or £50,000, whichever is higher.

In an open letter to the Prime Minister David Cameron, Shirley, co-founder of the Ambassadors for Philanthropy initiative, says the measure "would limit giving, damage hard-pressed charities and undermine this government's hopes of creating a big society".

The letter says the "vague and ill-considered proposals" were already discouraging major giving, risked destroying a conducive environment for major giving and would significantly hamper the work of many charities.

"It is telling that these naive proposals have come without consultation with either philanthropists or charities, and without – it would appear – discussion with those ministers with charity, arts and other responsibilities who would immediately realise the implications," the letter says.

It says major philanthropists have contacted Ambassadors for Philanthropy, which aims to give philanthropists a voice and promote major giving, saying the move could be "ruinous for many charities and voluntary sector organisations" and calling on the government to "drop this perverse proposal before any major damage is done".

The letter concludes: "Thus we call on you, Prime Minister, to commit to drop these damaging proposals now and use the forthcoming Giving Summit to draw on the knowledge and commitment of major donors to begin enacting reforms that can unleash the power of philanthropy as a force for good."

A spokeswoman for the Treasury said: "Reliefs exist for good reason, but it is not right that wealthy individuals can use them without limit to reduce their income tax bills to close to zero, often year after year. Therefore, we have taken the tough decision to introduce a cap on unlimited reliefs.

"There will still be tax relief for donations to charity and we remain committed to supporting philanthropy, which is why we are proactively exploring with philanthropists ways to ensure this new limit will not significantly impact upon charities that depend on large donations."

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