The Treasury has confirmed to the umbrella body that the cap will affect community investment tax relief
Community investment tax relief will be affected by the government’s new cap on tax reliefs, according to the NCVO.
The proposed cap, which 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, was announced in this year’s Budget. It also affects donations under Gift Aid, gifts of land and shares, payroll giving and two non-philanthropic reliefs involving loans to business and business losses.
The NCVO said it had received a confirmation email saying the Treasury "can confirm that CITR will be caught by the cap on unlimited tax reliefs" but could give no further details.
Sir Stuart Etherington, chief executive of the NCVO, said the capping of CITR, which allows investors in some social enterprises to reclaim up to 25 per cent of the value of their investment over five years, was in direct opposition to the government’s stated aspiration to improve social enterprise and social investment.
"The cap on tax relief is already damaging philanthropy," he said. "The confirmation from the Treasury today that measures relating to social investment will also be included in the cap could do untold damage to the emerging social investment market.
"This runs contrary to the establishment of Big Society Capital and all of the government’s aspirations to promote social enterprise."The government recently established Big Society Capital with £600m to stimulate the social investment market. In the Budget it also announced a review, to be carried out by the Treasury, intended to reduce barriers to social investment.