Tax relief compromise

The Financial Times is reporting that aides to the chancellor confirmed he was looking at ways to ensure organisations that are funded by one or two significant donors do not lose out as a result of the cap.

The paper said Osborne (pictured) had ruled out exempting the charitable sector altogether from the cap.

In last month’s Budget Osborne said the government would introduce a limit on all uncapped income tax reliefs. For anyone seeking to claim more than £50,000 of reliefs, a cap will be set at 25% of income.

The proposal was widely criticised for its last minute introduction into the Budget after it emerged the Treasury had not completed the required impact study before including nearly £500 million of extra revenue in accounts, and for the impact it would have on charitable donations.

Life company Prudential warned that the government needed to take care when drafting the cap, in case it unintentionally impacted on charities and small businesses.

Prudential technical manager Gerry Brown said the proposal currently lacked detail and would need to include specific exclusions for legitimate loss-making businesses, philanthropy, and other charitable giving.