The Chancellor has climbed down, but not far enough – Ernst & Young comments on charitable giving
Carolyn Steppler, private client services partner at Ernst & Young, comments on the Government’s u-turn on charitable giving:
“Charities and philanthropists will be breathing a sigh of relief in response to the Chancellor’s charity tax climb-down but, in our view, he didn’t go far enough. We would have liked to see the government retreat by another rung to remove the restrictions on trading losses and interest relief.
“In addition to charitable giving, the proposed cap on income tax reliefs also includes restrictions on reliefs that are designed to encourage entrepreneurship, such as relief for trading losses and interest relief for borrowing (for example, for those who have borrowed in their own name in order to support their business or company). These proposals still remain firmly in place.
“While the desire to stop the abuse of these allowances by the minority is understandable, the restriction of these reliefs for all high earners risks discouraging entrepreneurial activity. The restriction on interest relief in particular risks removing a further source of credit at a time when businesses are already finding it difficult to borrow.”