The charities tax cap - limiting relief at £50,000 or 25% of income - was proposed in George Osborne's March 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.
The cap on tax relief on charitable donations proposed in George Osborne's March Budget is to be dropped, the Treasury has announced.
The Deputy Prime Minister has defended the way the government handled the controversy over the 'pasty tax'. Speaking to ITV1's Daybreak Nick Clegg said the government was right to listen and react to the concerns of organisations and businesses and is still consulting over the charities tax.
Shadow Chancellor Ed Balls has described the Government's tax policy as "incoherent and flawed". He also welcomed the u-turns but told ITV News further tax reform was needed.
Justice Secretary Kenneth Clarke has defended the Government's tax U-turns, saying the changes came as a result of listening to taxpayers.Read the full story ›
Justice Secretary Kenneth Clarke says that the decision to back out of new VAT rules on caravans was a result of the government listening to taxpayers.
Bakery chain Greggs was celebrating today following the Government's U-turn on the unpopular "pasty tax".
Chancellor George Osborne caved in on his plans to charge the 20% rate of VAT on hot baked snacks such as pasties and pies.
The climbdown, which followed a campaign to scrap the tax that was supported by 300,000 signatures, saw Greggs shares rise 8% today.
Greggs chief executive Ken McMeikan said: "This is fantastic news for the customer more than anything.
"If we had to put up prices by 20% in the current marketplace when consumers are having a very difficult time we expected there would be an impact on sales but we don't know what it would have been.
"I think the Government deserves to be applauded."
After tonight's Budget u-turns we need rethink on biggest Budget blunders - tax cut for millionaires & lack of jobs & growth plan
It seems George Osborne has completely lost control at the Treasury - tax u-turn after tax u-turn and his economic plan collapsing..
Liberal Democrat MP for St Austell & Newquay, Stephen Gilbert, has said there will be dancing in the streets of Cornwall over the pasty tax u-turn: