Government plans to cap charitable donations scrapped

Chancellor George Osborne at 11 Downing Street. Credit: Reuters

Controversial plans to cap tax relief on charitable donations have been scrapped by Chancellor George Osborne, the Treasury has announced.

The cap - limiting relief at £50,000 or 25% of income - was proposed in Mr Osborne's March 21 Budget but sparked massive protest from charities, who warned they could lose a significant proportion of their income.

Announcing the latest in a string of U-turns on Budget proposals, following climbdowns on the "pasty tax" and "caravan tax" earlier this week, Mr Osborne said that he would be pressing ahead with the cap on income tax reliefs for wealthy people which do not relate to charitable donations.

Senior Political Correspondent Chris Ship reports on today's Government u-turn:

But Labour has accused Mr Osborne of trying to "bury bad news" by unveiling his latest climbdown while Culture Secretary Jeremy Hunt was giving evidence to the Leveson Inquiry.

This decision has already done considerable damage and has been responsible for the toughest year in a generation for Britain's charities and community groups. If ministers understood the work charities did, the vital difference they make for some of our most vulnerable and the important contribution they offer to make our communities stronger, this policy mess could have been avoided. Instead we have the spectacle of George Osborne trying to bury bad news on the day one of his rivals is in hot water at the Leveson Inquiry.

David Bull, the Executive Director of UNICEF UK, has welcomed the news. He said:

Today’s Government announcement on charitable tax relief is great news for vulnerable children. Donations from wealthy people are hugely important to UNICEF UK during humanitarian emergencies and this announcement will mean that we can continue to respond quickly, such as in the current food crisis in West Africa where one million children are at risk of severe malnutrition. The announcement shows the Government has been listening to charities during the consultation and we very much welcome today’s decision.

To read ITV News' Political Correspondent Lucy Manning's analysis click here.