George Osborne has performed a U-turn on plans to limit tax relief on charitable donations to £50,000. The proposals, which were intended to raise £300m for the Treasury by 2016/17, have been scrapped after persistent lobbying by charities which rely on philanthropic support.
Sir Menzies Campbell, Chancellor of the University of St Andrews, told The Saint that the Government’s change in direction was “obviously welcome”.
In April, The Saint reported that Sir Menzies had expressed fears that the proposals “run the serious risk of adverse impact on the higher education sector”.
The North East Fife MP sent a letter to Mr Osborne in which he raised concerns about the Government’s plans: “To restrict tax relief in the way you have proposed can only add to these pressures. I therefore urge you to reconsider your proposals to change the existing tax regime so far as it affects charitable donations in general and universities such as St Andrews in particular,” he said.
However, just a month after the proposals were declared, the Chancellor announced the government’s climb down. In a statement, Mr Osborne confirmed that the Government had “listened” to concerns over limiting tax relief.
He said: “It is clear from our conversations with charities that any kind cap could damage donations, and as I said at the Budget that’s not what we want at all.”
Sir Menzies highlighted the particular importance of the change in policy to St Andrews. He said: “In the present economic circumstances organisations of all kinds have become deeply reliant upon charitable giving.
“The proposals had the potential to hit St Andrews University particularly hard at a time when we are engaged in our 600th anniversary celebrations and the fundraising designed to create substantial endowment fund,” he said.
The University welcomed the change in policy. A spokesman told The Saint: “We are very pleased that common-sense has prevailed.
“St Andrews was one of a large number of charitable causes to add its voice to the public debate on this proposal and it appears that the weight of argument against restricting charitable tax relief proved to be an unassailable logic,” he said.
George Osborne announced that the Government had made to decision to row back on the proposal in order “to focus on the big issues like the worsening eurozone crisis and Britain’s deficit, and not get distracted with unnecessary arguments.
“We’re going to concentrate our efforts on what really matters: keeping Britain safe in the gathering storm,” he added.
Between 1 August, 2010 and 31 July 2011, St Andrews received almost thirty donations in excess of £100,000, none of which would have received a tax break had the proposals gone ahead.
The Coutts’ Million Pound Donors Report concluded that higher education was the most popular destination for gifts of more than £1 million, as shown by 2011’s £43m increase in donations to British universities.
Mr Osborne’s decision to scrap the tax is the latest in a series of Budget changes, including the caravan and so-called ‘pasty tax’. Charities welcomed the change while Labour lamented the “shambolic” nature of the Government’s recent u-turns which showed how “ill-thought” the Chancellor’s Budget had been.