Cap on tax relief for major donors dropped

The Treasury has announced that the government will drop plans to cap tax relief on donations to charity.

The proposed cap, which was previously announced by Chancellor George Osborne in this year's Budget, would have limited the amount of tax a donor could reclaim to £50,000 or a quarter of their income, whichever was higher, from April 2013. The department will proceed with a consultation on plans to limit other tax reliefs for wealthy individuals, but there will be no limit on donations to charity.

A statement from 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."

The Treasury will shortly write to the sector confirming the new position.