Charities will lose £1 billion under George Osborne’s plans to cap tax reliefs which will raise just £200 million for the Treasury, it was claimed today.
The dramatic figures showed how the poor will be hit by the proposal which has sparked a furious backlash.
David Cameron came under mounting pressure to do a u-turn as Zac Goldsmith became the most high-profile MP to join growing opposition on the Tory benches and Business Secretary Vince Cable expressed concerns.
Millionaire Richmond Park MP Mr Goldsmith described the current plans as “nuclear” and said the Government had no evidence “to justify its decision to crap on the charity sector”.
In a series of tweets, Mr Goldsmith said the cap would “dramatically curtail giving”.
“The plans have to be amended. They make no sense & will massively harm charities,” he added.
“If people use bogus charities to avoid tax, close them. But it’s wrong to clobber them all to prevent minority abuse.”
The comments were re-tweeted by Mr Goldsmith’s sister Jemima Khan, who asked: “Am I the only person who likes U-turns? Shows they listen”.
A spokesman for Mr Cable said he supported a crackdown on “abusive tax avoidance” but it should be “separated from genuine charitable giving” amid concerns it will hit large donations to universities.
It came as Matthew Bowcock, chairman of the Community Foundation Network which brings donors and community groups together, produced the most dramatic figures yet on the impact of the proposal.
“We estimate that if you add together those who would have given and others discouraged from becoming donors, the charitable sector would be £1 billion worse off while HMRC would gain only £200 million,” he wrote in a letter to the Standard.
It is the latest attack on Mr Osborne’s plan limit tax reliefs to £50,000 or 25 per cent of income from 2013 in a bid to stop the system being “abused” by the super-rich to cut tax bills.
Treasury sources described the estimate as “very high” but did not have an alternative, vowing a full assessment will be carried out before the measure is brought in. Ministers have vowed to work with charities to ensure they do not suffer.
