Cap on donations ‘targets tax cheats’

Some of the UK’s wealthiest people are donating to charities that “don’t do a great deal of charitable work” in order to “wipe out” their income tax bills, Downing Street said yesterday.

Number 10 strongly defended plans in Chancellor George Osborne’s Budget to cap tax relief on charitable donations, saying it was necessary to prevent “abuse” of the system.

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The move has prompted an outcry from charities, which fear big donations will dry up as a result. However, the Prime Minister’s official spokesman said wealthy individuals were exploiting the system to pay less in tax than the average family.

He said: “They may be giving to charities and those charities don’t, in all cases, do a great deal of charitable work.

“Certain individuals in this country on very high incomes are exploiting these reliefs to reduce their tax bills.”