12:09pm Monday 16th April 2012
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The Government is to hold a formal consultation on Budget measures to rein in tax reliefs claimed by the rich, amid continuing controversy over their impact on charities, Downing Street has said.
A Treasury minister has accepted that the introduction of the cap would have an impact on charities. Exchequer Secretary David Gauke said the measure was expected to bring in £300 million of additional revenue across the range of reliefs, of which between £50 million and £100 million would come from the charities cap.
Ministers are due to hold discussions over the coming days and weeks with charities and major philanthropists, who fear that the change will significantly reduce giving to good causes.
And a formal consultation will be held on the implementation of the proposal set out by Chancellor George Osborne in his March Budget, which would limit income tax reliefs to £50,000 or 25% of income, said Downing Street. Results of the consultation are expected to be published in the summer.
A spokeswoman for Number 10 said that Prime Minister David Cameron wants to encourage charitable giving, but declined to say whether he agreed with Mr Gauke that the proposed cap would reduce donations.
The decision to hold a consultation will fuel speculation that ministers are preparing to back down on the measures set out by Mr Osborne in his Budget Red Book, which details the financial implications of tax-and-spend decisions.
The Financial Times reported that the Chancellor is willing to consider plans to raise the cap on reliefs on charitable giving to 50% of income or to allow donors to roll over unused tax reliefs to future years if they are used for gifts to good causes.
The Number 10 spokeswoman said that the changes set out in the Budget, which are due to be implemented through the 2013 Finance Bill, remain Government policy.
"What is in the Red Book is Government policy. It is set out," she said. "But there is a process in terms of how it might be implemented. That is the conversation we are now going to have with charities."
On Sunday night, the Treasury released figures showing that almost one in 10 people earning more than £10 million a year is paying less than the 20% basic rate of income tax. It said figures released for the first time underlined the need for action to prevent the super-rich exploiting the system of reliefs to reduce their tax bill below that of low-paid workers.
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