Ministers' anger at charity tax could force George Osborne to back down


George Osborne may soften the blow to charities of his plan to cap tax relief on donations amid a growing backlash from philanthropists, Cabinet ministers and senior Tory MPs.

The Chancellor is under mounting pressure over his decision in last month's Budget announcement to bring in an annual cap of tax-free giving of £50,000, or 25 per cent of an individual's income, from April next year.

Whitehall sources said Mr Osborne faced pressure from other ministers to phase in the change over two or three years to give charities time to prepare. Vince Cable, the Business Secretary, who is responsible for higher education, is said to be concerned that donations to universities will be hit, and Jeremy Hunt, the Culture Secretary, about the possible impact on arts groups. Danny Alexander, the Liberal Democrat Chief Treasury Secretary, backs the Chancellor's move to stop people using charitable gifts to avoid tax but wants to ensure the impact is fully discussed with charities in order to limit the damage to them.

Yesterday, David Cameron sought to lower the temperature by promising that he would "look very sympathetically" at the charities' concerns about losing big donations. He sparked speculation about a Government retreat by adopting a markedly different tone to a Downing Street briefing 24 hours earlier, which suggested that wealthy donors were tax dodgers.

Speaking at a press conference during his visit to Indonesia, the Prime Minister said: "There's no doubt abuse is taking place. Some people have been using charities established in other countries to funnel money into those so they're not paying 50p tax or even 45p tax but in some cases are paying 10 or 20 per cent tax. I think that isn't right." Mr Cameron said he and Mr Osborne were united in wanting to achieve the goals of increasing charitable giving while making sure the tax system is not abused. "I am quite convinced we will be able to do that," he said.

Downing Street sources denied that Mr Cameron had signalled a climbdown, insisting he was repeating the position the Chancellor had set out. Both Number 10 and the Treasury will be nervous about admitting a U-turn, which could add to the impression that the Budget is unravelling after criticism of the so-called "granny tax" and the "pasty tax". However, Whitehall sources believe the donations cap will now be "tweaked" in an attempt to allay the charities' fears.

A survey of 120 senior charity executives published today found that almost nine out 10 believe the cap will hit their gifts from major donors, with half of those predicting their big donations would fall by at least 20 per cent. John Low, chief executive of the Charities Aid Foundation which carried out the survey, said: "Ultimately, it will not be the rich who will lose out. It will be the most vulnerable people in society, and the other causes charities support."

Tory MP Conor Burns said: "I think it's time we do a quick review and retreat on this." Mark Pritchard, secretary of the 1922 Committee of Tory MPs, said: "This appears to be going in the opposite direction of encouraging philanthropy and major giving to charity."


Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
peopleLynda Bellingham's tragic final Loose Women appearance moves audience to tears
Arts and Entertainment
'Right Here' singer Jess Glynne is nominated for Best Newcomer at the MOBO Awards 2014
musicExclusive: Jess Glynne hits out at 'ridiculous' criticism of white artists nominated for Mobo Awards
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Separated at birth? Frank Sivero (left) claims The Simpsons based Mafia character Louie on his Goodfellas character
arts + entsFrank Sivero sues Simpsons studio over allegedly basing mobster character on Frank Carbone
Carl Bernstein (left) and Bob Woodward (right) with former 'Washington Post' executive editor Ben Bradlee

The Washington Post editor helped Bob Woodward and Carl Bernstein bring down President Nixon


Stephanie first after her public appearance as a woman at Rad Fest 2014

Arts and Entertainment
Laura Wood, winner of the Montegrappa Scholastic Prize for New Children’s Writing

Children's bookseller wins The Independent's new author search

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Database Administrator

£300 - £350 Per Day: Clearwater People Solutions Ltd: The role could involve w...

Science Teacher

£21000 - £35000 per annum: Randstad Education Cambridge: Qualified secondary s...

Deputy Head of Science

£22000 - £36000 per annum + MPR / UPR: Randstad Education Southampton: Our cli...

Finance Manager - Recruitment Business (Media & Entertainment)

£28000 - £35000 per annum + negotiable: Sauce Recruitment: We have an exciting...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London