Government faces pressure over charity tax proposals

The Government claims the vast majority of donations to charities will not be affected Credit: ITV News

The Government has come under fresh pressure to reverse its plans to cap tax relief of charitable donations after charities, philanthropists and MPs voiced their opposition to the proposals.

46 of the country's "leading philanthropists" signed a letter to The Sunday Telegraph warning that the proposals will "undermine the motivation to give generously and will deprive charities of much-needed funds".

The signatories include the head of Marie Curie Cancer Care, the co-founder of The Body Shop and members of the Sainsbury and Getty dynasties.

The Government is proposing to cap the amount of tax that can be reclaimed on charitable donations from April 2013. It says the measure is being used by wealthy people to avoid paying tax.

Currently, higher-rate taxpayers can claim back more than half of the tax on donations through tax relief, but the new plans would see that amount capped at £50,000 or 25 percent of their income - whichever is greater.

The Treasury has said it intends to press ahead with the plans but will work to avoid any negative impact on charities.

The Government does not think that it is right that very wealthy individuals can use tax reliefs without limit to reduce their tax bills to close to zero, often year after year. We support charitable giving and the vast majority of donations will be completely unaffected.