One of the surprises of the Budget announcements made on 21 March 2012 was the capping of certain reliefs, particularly the reliefs for charitable giving and business losses.
The aim of the cap is to restrict the amount of tax relief claimed by high income earners.
What is the cap?
The Budget itself contained very few details about the proposed cap other than:
- It will be introduced from April 2013,
- The Government plans to introduce a limit on all currently uncapped income tax reliefs.
- The restriction is proposed to be set at 25% of an individual’s income (the precise definition of which is yet to be confirmed) or £50,000, whichever figure is greater.
Reaction from charities
One of the key tax reliefs affected is that afforded to individuals who make charitable donations. Charities are concerned that the cap on donations will drastically reduce the larger donations on which they rely.
Detailed legislation is unlikely to be published on this issue until the present round of consultations are completed later this year.
We will, of course, keep our clients informed as more information becomes available.
If you have any queries or concerns please do give us a call.
John Elliott, Tax Partner