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The government is to reconsider more Budget announcements, following its moves earlier this week to temper the furore caused by the imposition of VAT on hot takeaway food and static caravans.
The Treasury today said it will exempt charities from the tax-relief cap unveiled by the chancellor in March; the department also launched a consultation on two measures designed to tackle avoidance – both of which were significant parts of George Osborne’s Budget speech.
John Hemming, chairperson of Charity Tax Group, a campaigning body, said he was ‘delighted the government has listened to reason and decided to reverse the decision to implement a cap on tax reliefs’.
He went on to claim the U-turn ‘proves how important it is for… a strong united voice on the key tax issues affecting charities.’
The plans as originally announced by the chancellor were for a limit of £50,000 or 25%, whichever the greater, on the maximum amount a taxpayer would be able to reclaim in relief.
Philanthropic giving would have been included in the rule – set to come into force in April 2013 – much to the alarm of charities throughout the UK, many of which joined forces in the Give it Back, George campaign.
George Osborne announced the government rethink by saying, ‘I can confirm we will proceed next year with a cap on income tax reliefs for wealthy people, but we won't be capping relief for giving money to charity. It is clear from our conversations with charities that any kind cap could damage donations.’
Today’s consultation document published by the Treasury explores the proposed details of an annual charge on residential properties valued over £2m owned by certain ‘non-natural’ persons such as companies and collective investment schemes, and it sets out details of the proposed extension of the capital gains tax (CGT) regime to the disposal of UK residential property by non-resident, non-natural persons.
The Treasury said it intends for both measures to be part of a package to ensure the fair taxation of residential property and to clamp down on avoidance, including the side-stepping of stamp duty land tax.
These latest changes to Budget proposals come only days after the government pledged to moderate the so-called pasty tax and a VAT rise on static holiday caravans, causing BBC business editor Robert Peston to tweet, 'I can't remember so much of any Budget disintegrating so fast'.
