Tory Party treasurer hits out at charity tax cap
The Conservative Party treasurer adds his voice to growing criticism of a proposed cap on tax relief for charitable donations, warning it will deter the rich from giving.
Millionaire Lord Fink told The Sunday Times the move would inevitably reduce the amount they received.
“If you have to pay out of your capital the tax on your income you give, it will put people off,” he said.
In last month’s budget, Chancellor George Osborne unveiled plans for a cap on tax relief of £50,000 on charitable giving or income from interest on loans.
Senior Tory MP David Davis told BBC1’s Andrew Marr Show it was a “tax without friends” and said he expected the cap to be dropped and replaced with an alternative method to tackle the issue.
The Sunday Telegraph said the main option under consideration was a US-style “lifetime legacies” system that allowed individuals to “donate” assets to institutions and charities but continue to benefit from their assets during their lifetime.
In a letter to the paper, 46 wealthy donors including members of the Sainsbury family, urged a rethink.
“The proposal in the budget to cap charity tax reliefs is a brake on philanthropy that may deter future donors. It is confusing and dispiriting, and we urge the prime minister and chancellor to think again,” they wrote.
“None of us view tax relief as a primary motive, although it may substantially increase our donations.
“But it is an important signal that the decision to use wealth to help others, rather than to enrich ourselves, is recognised, encouraged and supported by society.”
Amid reports that the Treasury was considering alternatives to the £50,000 cap, a spokeswoman said it was in talks with philanthropists to find ways to limit the impact on charities that rely on big donations.
“We support charitable giving and the vast majority of donations will be completely unaffected,” she said.
Critics have questioned why the tax system, rather than a charity sector watchdog, is being used to tackle what the government says is a problem with bogus charities being used as vehicles by a small number of individuals.
Prime Minister David Cameron said last week that he would listen “very sympathetically” to charities concerned that philanthropic giving will decline as a result of the change.