Philip Hammond signals rethink on high taxes for referendum donors
The Chancellor has indicated he is “sympathetic to looking carefully” at laws that tax donations given to referendum campaigns, it has emerged.
According to the Daily Telegraph, Philip Hammond has hinted he is keen to review existing laws which cost Brexit donors millions after HMRC taxed the cash they gave to the referendum campaign.
Political donations can be considered a “gift” and therefore, can be written off.
However, Brexit donors complained when they received a 20% tax bill on their donations after HMRC used an obscure section of inheritance tax law to claim the cash.
Last night Philip Hammond said he was considering reviewing the law so donations to referendum campaigns could not be taxed in future.
He did not suggest this would be done retroactively, so any Leave campaign donors would still be forced to pay 20%.
In the House of Commons on Tuesday, Conservative backbench MP Jacob Rees-Mogg said it was “deeply unfair” to subject referendum donors to high tax bills just because they had given money to a political campaign.
Financial Secretary to the Treasury Mel Stride added any reforms would be considered for future campaign referendums, with the Treasury's position not to apply tax changes retrospectively.
Ms Stride said: "There is an exemption to the charge for inheritance tax relating to donations to political parties that does not exist in relation to donations to referendum campaigns.
"But I can inform him I and the Chancellor have discussed the issues he has raised over the previous weeks and we're sympathetic to looking carefully at how the law may be changed for future campaign referendums."
Peter Cruddas, a City financier and Tory donor facing a demand of £200,000 on his £900,000 donation to the Leave campaign, said the admission was an “acknowledgement that the Government think the law was not intended to tax donations by publicly spirited people".
“Clearly it [the current law] is either right or it’s wrong, and if it is wrong it should be back-dated."