Hannah Terrey from Charities Aid Foundation has called on the Chancellor George Osborne to exempt charitable donations from a proposed cap on unlimited tax relief.
More than a hundred charities have signed up to the 'Give it Back, George' campaign which is urging the Government to re-think the proposals.
It seems the government has entered a retreat on the 'charity tax'.
A Downing Street spokesperson has said a "formal consultation" will take place in the summer.
Treasury Minister David Gauke has defended the government's controversial new plans to impose a cap on tax relief benefits that can be obtained through charitable giving.
The proposed cap would be set at £50,000 in any one year, or at 25% of an individual's income; whichever is greater.
Several charities and some "leading philanthropists" have hit out at the proposals over fears it will "undermine the motivation to give generously and deprive charities of much needed funds."
Treasury Minister David Gauke has defended the government's proposed plans for a cap on tax relief for charitable giving.
He said the overall cap on tax reliefs planned as part of the 'crackdown' on super-wealthy tax dodgers would bring in £300 million, of which between £50 million and £100 million would come from the charities cap. He told the BBC Radio 4 Today programme:
– Exchequer Secretary David Gauke
We don't think it is entirely fair that the tax system, as currently designed, does mean that there are some very wealthy individuals who are essentially able to take themselves out of the income tax system.
The broader point is that at the moment people are able to give to charities and indeed make use of other reliefs within the tax system that gets their rate down and the concern that we have, we don't think it is fair that people are able to get the rate down that low even when the donations are to perfectly legitimate charities.
He said the Government would be working with charities to find ways to protect those that are particularly affected by large donations.
Almost one in 10 people earning more than £10 million a year is paying less than the 20% basic rate of income tax, according to new figures released by the Treasury.
- 6% of £10 million-plus earners paid less than 10% tax
- 3% of £10 million-plus earners paid less than 20% in tax
- Less than 75% of £10 million-plus earners paid more than 40%
The Government said the figures showed the new for urgent action to prevent the super-rich exploiting the system to reduce their tax bill. A spokesman said:
– Treasury spokesman
There are currently millionaires paying a lower tax rate than ordinary taxpayers.
This is the system we have at the moment, but the Government is committed to making it fairer. We're capping benefits and these figures clearly show why it's fair to cap tax reliefs for the wealthy as well.
– Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations
The fact that the majority of coalition backbenchers oppose the proposed cap lends further weight to the thousands of organisations and individuals who have already spoken out via the 'Give it Back George' campaign. The Government needs to reverse the decision as quickly as possible, as the widespread alarm and uncertainty is already impacting on vital donations.
In a statement the Treasury said: "There are currently millionaires paying a lower tax rate than ordinary taxpayers. This is the system we have at the moment, but the Government is committed to making it fairer. That is why we are capping tax reliefs for the wealthy.
The Budget makes clear that we want to ensure genuine charities that rely on large donations are not hit significantly, which is why we said we'd spend the next year working with the charity sector and philanthropists on the details."
The Treasury says almost one in 10 people earning more than £10 million a year are paying less than the 20% basic rate of income tax. It comes as the government defends itself over plans for a tax crackdown.
- 6% of people earning £10 million or more paid less than 10%
- 3% came in below the basic 20% rate
- Fewer than three quarters paid more than 40%
– John Low, chief executive of the Charities Aid Foundation
The Government now needs to listen and act on to this clear message from coalition backbenchers, as well as from ministers, charities and donors, and reverse this ill-thought through tax change. The arguments against this blanket restriction on major donations are frankly overwhelming. It is absurd that proposals to raise a small amount of extra tax revenue from generous philanthropists risk big falls in donations to things like medical research, hospice care and education.