George Osborne promises charities will be protected under tax relief cap proposal

Chancellor plans year-long consultation but Charities Aid Foundation insists cap be dropped immediately

George Osborne
George Osborne

George Osborne, the Chancellor of the Exchequer, has pledged to ensure charities are protected under plans to introduce a cap on tax relief for charitable giving.

Osborne announced in the Budget in March that from April 2013 the government intends to 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. This includes tax relief on charitable donations.

He told Radio 4’s Today programme on Saturday that he wanted to "sit down with the charities, get it right and make sure they get protected".

He said HM Treasury always planned to consult on the measure.

"I didn't actually publish a load of detailed legislation and ask Parliament to vote on it immediately," said Osborne. "I said: 'Let's take 12 months to get this right.' I know in the first few weeks it's caused a rush of headlines, but good tax making takes time and that's what I want to do."

A spokeswoman for the Charities Aid Foundation, which has been campaigning against the cap, said philanthropic giving had already suffered since the measure was proposed and a year-long consultation would only lead to more uncertainty and harm.

"It is damaging charities every day," she said. "We know significant donations have been pulled since the Budget, so there is a lot of concern.

"We want a complete reversal of the government’s line. It would be very bad news this goes on for another 12 months."

Ben Kernighan, deputy chief executive of the National Council for Voluntary Organisations, said it would welcome the opportunity to meet Osborne.

"We are also encouraged that the Prime Minister, Deputy Prime Minister and Chancellor state that they do not want to harm charities. We know that any cap on tax relief on charitable donations would harm charities, so the cap must be dropped," he added.

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