Charities Survey Shows Fear Over Tax Relief Cap

A survey carried out by the Charities Aid Foundation has found nine out of ten charities fear government plans to limit tax relief will result in a drop in donations from wealthy benefactors.

The foundation question 120 charity senior executives following last months budget in which Chancellor George Osborne announced a £50,000 cap on tax relief – or 25% of income if that was higher.

Since the announcement the government has faced calls for a rethink of the cap but they have remained firm saying the rich should pay their “fair share”.

The survey suggests that 88% of those questioned believed the cap would have a "negative impact on the value of donations" from major donors, while 56% believed donations would fall by 20%.

About 89% of those surveyed expressed their concern about the implications of the tax relief cap on the charity sector while 91% said there should have been consultations before the cap was announced.

Up to 78% of those surveyed called on Mr Osborne to reverse his decision on the cap.

During a trade mission to South East Asia David Cameron said he had no doubt there were people using a range of tax allowances to reduce their own tax returns to low figures and that some people were using charities based overseas to "funnel money" so they were paying tax rates of just 10% or 20%.

"I think that isn't right, so I'm quite convinced we can get the balance right increasing philanthropy and charitable giving, which is an important part of our culture which I want to see expanded, and making sure the tax system isn't abused," he said.

The foundation's John Low however said: "This survey shows the widespread alarm and despair among charities at the government's decision to cap tax relief on donations.

'Rather galling'

Adding, "There are fears across the charity world that donations will be hit, which means the vital work that charities do will be damaged at a time when demand is high and public spending cuts make the charity safety net even more important."

(H)