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Charity tax relief plans scrapped
George Osborne wrote to charity sector representatives to inform them of the decision to scrap the cap on tax relief
Controversial plans to cap tax relief on charitable donations have been scrapped by Chancellor George Osborne, the Treasury has announced.
The cap - limiting relief at £50,000 or 25% of income - was proposed in Mr Osborne's March 21 Budget but sparked massive protest from charities, who warned they could lose a significant proportion of their income.
Announcing the latest in a string of U-turns on Budget proposals, following climbdowns on the "pasty tax" and "caravan tax" earlier this week, Mr Osborne said that he would be pressing ahead with the cap on income tax reliefs for wealthy people which do not relate to charitable donations.
Since the Budget announcement, the Treasury has been holding discussions with charities and major donors to discuss the scale of impact which they believed the cap could have on charitable giving.
The discussions took place as more than 1,000 charities signed up to a call by the Charities Aid Foundation (CAF) for the Government to think again.
Announcing his decision, Mr Osborne said: "I can confirm that 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 of cap could damage donations and, as I said at the Budget, that's not what we want at all. So we've listened. Frankly, at a time like this the Government is going 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."
Mr Osborne wrote to charity sector representatives to inform them of the decision.
CAF chief executive John Low said: "We are delighted that the Government has responded to the challenging calls from philanthropists and charities across the country and taken the bold decision to exempt charitable donations from the cap on tax relief."
A Treasury spokesman said: "We said at the Budget that we did not want the cap on the amount of tax relief people can claim to impact significantly on charities that rely on large donations. Since then, we had discussions with charities. Following these, tax relief on donations will be exempt from the cap when it is implemented next year."