Charity concern on tax relief
A CITY accountancy firm is warning that charities are concerned about the fallout if the Government goes ahead with its proposals to restrict tax relief on charitable giving.
The 2012 Budget plans would cap how much income an individual can offset at £50,000 per year, or a quarter of their income, whichever is higher from 2013.
Paul Evans, senior partner at Stephenson Smart & Co, which acts for several charities and is monitoring the situation closely, said: “Currently individuals can offset their income against income tax reliefs, and as a result may pay no income tax at all.
“The Government’s aims behind the proposals is to stop individual taxpayers with very high incomes making use of unlimited tax relief to avoid paying tax at all.
“It remains to be seen whether it goes ahead, but charities are concerned that individuals will reduce their giving as a result of the cap.”
The Government argues that individuals who want to give more than 25 per cent, or £50,000, of their income to charity may still do so, but from their taxed income.
HMRC has said it will be issuing a consultation document on the detail of the policy, including implications for philanthropic giving, in the summer.
Charities argue that this is an unnecessary measure that would be damaging, particularly for many genuine charities which depend on large donations.
UK Giving 2011, an indepth survey of charitable giving, showed that in 2010/11 the UK public gave £11 billion to charity, but the average monthly donations fell from £12 in 2009/10 to £11.
senior partner: Paul Evans, of Stephenson Smart & Co.