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PM defends tax cap plans

PM defends tax cap plans
David Cameron has tried to cool the 'charity tax' row by stressing that there is "plenty of time" to consult on the plans.

Speaking to Sky News in Derby, the Prime Minister said: "This was never going to be introduced until next year... there will be plenty of time to get it right, plenty of time to consult and to listen but the key principle is that - more for charity and philanthropic giving? Yes. But allowing people to drive their tax rate down to 10% when they’re some of the richest people in the country? No."

Labour will on Wednesday seek a vote in Parliament over the tax, with Shadow Chief Secretary to the Treasury Rachel Reeves accusing the Government of being in "a complete mess over tax relief on charitable donations".

At the moment the cap is set at £50,000 or 25% of a person’s income, but Chancellor George Osborne is considering proposals to have a separate limit on donations of 50% of a person’s income.

Another possible move is to allow donors to roll over unused reliefs into future years if they are used for donations.

Ministers have argued that the current tax system allows the rich to avoid paying income tax, with new Treasury figures show that 6% of Britain's wealthiest people used tax relief to reduce their tax rate to less than 10%.

Downing Street paved the way for a climbdown earlier today by stressing that a full consultation on the tax relief caps will take place this summer.

A Number 10 spokeswoman said a "formal consultation on the implementation" was due in the next few weeks.

"It will be published in the summer," she said. "We want to explore ways we can introduce a cap....there are various options on the table."

A Number 10 source told PoliticsHome.com that the consultation would be on implementation of the broader policy of tax relief caps, not just charitable donations.

Reacting to the timing of the consultation, Shadow Charities Minister Gareth Thomas said: "Charities already struggling to make ends meet... will think David Cameron is just fiddling while Rome burns. This has been particularly badly handled by George Osborne and needs sorting now if donations aren't to dry up for many of Britain's vital charities."

Tony Blair also weighed into the debate. Writing for Huffington Post ahead of his speech to the Global Philanthropy Forum in Washington, former Prime Minister said:

"This is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it."

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