Downing Street faces backlash over charity ‘tax avoidance’ claims

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By Andrew Barr
 
Downing Street is facing a backlash from charitable organisations after claiming that some wealthy donors give to charity in order to cut their tax bills.
 
A spokesman for David Cameron said: “In certain instances individuals may be giving money to charities and those charities don’t in all cases do a great amount of charitable work.”

He added: “The system as it stands can be and is being abused. We cannot be in a situation where very wealthy individuals are able to wipe out their tax bills by using these reliefs.”

A new cap on tax relief for major donations to charity was announced in Chancellor George Osborne’s 2012 Budget. The move has been met with opposition from charities who say that wealthy philanthropists are vital to their work and should not be discouraged by the Government.

John Low, chief executive of the Charities Aid Foundation, said: “This is not a ploy to save tax. Philanthropists who make large donations give away far, far more than they could ever claim in tax relief. That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society.

“If there are specific problems with the current system we would naturally be delighted to work with the chancellor to ensure tax reliefs are used for the purpose intended.

“But imposing a blanket cap on tax relief will cost charities millions of pounds by making it more difficult for philanthropists to make major donations and undermine the idea of the Big Society which the government is trying to promote.

“We should recognise and celebrate today’s great philanthropists, not brand them as wealthy tax dodgers.”

A Government cap on tax reliefs will increase the cost of giving to charity for philanthropists, meaning that some of the largest donors are likely to start giving less to good causes.  Charities have slammed the depiction of philanthopists as tax dodgers.

According to the ‘Give it Back George’ campaign set up to counter the move, approximately 45% of the total amount given to charity is collected from only 7% of donors.

Martin Sime, Chief Executive of the Scottish Council for Voluntary Organisations, said: “To risk reducing donations to charity or making giving more complicated is a very dangerous move which flies in the face of the UK Government’s pledge to promote philanthropy.

“These changes could stifle donations from wealthier people whose generosity is helping charities to continue supporting the most vulnerable members of society when their budgets are being squeezed like never before.

“The cap is effectively branding charitable giving as tax avoidance. It could seriously affect larger organisations which depend on major gifts from philanthropists and the ripple effect could also see smaller, local organisations lose out as charitable foundations will have fewer funds to distribute.

“We urge the UK Government to exempt charitable donations from the caps before they can do any damage to third sector organisations across Scotland and call on the Scottish Government, MSPs and Scottish MPs to take up this issue with the Treasury and support the Give it back George campaign.”

In the midst of UK Government cuts there is an increasing demand on the voluntary sector to help those in need. Many people are also more reluctant to give to charity, making philanthropists and wealthy donors more important now than ever.