WILLIAM Hague has paved the way for government concessions on the capping of tax relief on charitable donations after a group of leading philanthropists, including Stanley Fink, said it would deter people from giving to good causes.
Hague, the foreign secretary, appeared to hint at a compromise.
“Finding a solution that takes account of the concerns that have been expressed is something the Prime Minister and the chancellor are open to,” he said.
The Tories faced embarrassment after party treasurer Lord Fink spoke out, saying: “By definition, if the government change the tax rules, it would change the gross [charities get]. If you have to pay out of your capital the tax on your income you give, it will put people off.”
The former Man Group chief executive was one of 46 philanthropists or foundations, including three members of the Sainsbury supermarket family and Gordon Roddick, widower of Body Shop founder Anita Roddick, to warn in a Sunday Telegraph letter that the planned capping of tax relief at £50,000 a year, or 25 per cent of an individual’s income, will discourage giving.
The chorus of opposition swelled over the weekend. Senior Tory backbencher David Davis told the BBC the proposal “seems like an assault on the Big Society idea” and former Liberal Democrat leader Sir Menzies Campbell complained of a lack of consultation over the reforms.
Another ex-Lib Dem leader, Lord Ashdown, said however that a “sensible balance” should be struck. “Just imagine everybody did this, that everybody said I’m not going to pay my taxes, I’m going to donate to a charity of my choice,” Ashdown said.
Treasury sources pointed to HMRC data which they claim shows that people earning £20,000 pay a higher rate of tax than a few individuals who earn millions of pounds but who make use of various reliefs. But the overwhelming majority of high earners pay much higher tax than the poor, according to HMRC data, and the Treasury hasn’t released evidence backing up its claims. Last night a Treasury spokesman said: “It is right to cap reliefs so wealthy individuals cannot use them to reduce their tax bill to practically zero. Someone earning £4m can still give £1m with reliefs, and more if they want to.”