Government will not move on tax relief cap until consultation is completed

Sector representatives met Treasury ministers in what Acevo deputy chief executive Peter Kyle calls a sometimes 'heated' meeting

Acevo deputy chief executive Peter Kyle
Acevo deputy chief executive Peter Kyle

The government will not make any changes to the proposal to introduce a cap on tax relief for charitable giving before a consultation on the measure has concluded, charity leaders have been told.

A delegation of sector leaders met the Treasury minister David Gauke yesterday to discuss the proposed cap on tax reliefs for charitable giving, which will limit the amount of relief an individual can claim in any year to a quarter of their income or £50,000, whichever is higher, from 2013.

They said they were told there would be no change in policy before a consultation is held in the summer.

Peter Kyle, deputy chief executive of the chief executives body Acevo, said the meeting was "heated at times" but sector representatives had made it clear they did not want the cap to be implemented.

"We’ve told them in no uncertain terms that a protracted consultation would lead to suffering among beneficiaries of charities," he said. "We made it clear that this is a policy that would hit the poor, not the rich.

"They believe they can carry out a sizeable consultation without any impact on the sector.

Kyle said David Bull, chief executive of Unicef UK, was able to provide a number of examples of how the cap was already affecting his donors.

"We’ve no idea what behaviour change this will lead to," said Kyle. "It’s not clear they are even gathering evidence to find out what the effect on the charity sector might be.

"This is one of the most incompetent pieces of policymaking I’ve encountered in all my time in this business."

Ben Kernighan, deputy chief executive of the umbrella body the National Council for Voluntary Organisations, said: "What was encouraging was the unanimity of views that were expressed by umbrella bodies, major charities and philanthropists’ representatives about how negative any cap would be.

"We also made Gauke aware of the strength of feeling among his own backbenchers.

"A wise minister would be thinking again, because at some stage they will have to get the support of parliament for this measure. I’m not sure that’s something they can be confident of securing."

A spokeswoman for the Treasury said it was not right that wealthy individuals could use tax reliefs without limit to reduce their income tax bills to close to zero.

"The Budget makes clear that we want to ensure genuine charities that rely on large donations are not hit significantly, which is why we said we’d spend time working with the charity sector and philanthropists on the details," she said.

The Northern Ireland Assembly has also agreed that it opposes the cap.

A resolution agreed by assembly yesterday said: "This assembly expresses concern at the proposals by the Chancellor of the Exchequer to limit tax relief on large charitable donations; believes that this could have a devastating impact on charities; and calls on Her Majesty’s Government to abandon this approach."

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