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U-turn announced on charity relief cap

In the March Budget the Chancellor drew gasps from the charity sector by saying that all currently uncapped income tax reliefs would be capped at 25% of an individual’s ‘income’ (the exact definition of which is yet to be confirmed) or £50 000 whichever is greater.

The cap was intended to apply to all existing reliefs that are not otherwise restricted and would take effect from April 2013.

For example income tax relief on pension contributions would not be affected by the new measures as these are already limited by the annual allowance but it would catch those generous souls who choose to give substantial amounts to charity each year.

Higher and additional rate taxpayers can claim further tax relief...

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