UK Wealth Manager Hits Out At Cap On Charitable Giving

Max Skjönsberg

13 April 2012

Brewin Dolphin is alarmed about the UK government’s plans to cap tax relief on donations to 25 per cent of a donor’s income when giving more than £50,000 (around $80,000).

The UK-based wealth manager called the claim that philanthropists are giving money to good causes as a way of dodging tax an “outrageous slur”.

The proposed measure, a part of the UK finance minister’s budget speech in March, could mean that many private investors will not be able give away as much as before, the firm said.

Brewin Dolphin manages over £24 billion on behalf of private investors, including £1.7 billion for registered charities.

The firm said that it has been concerned about the difficulties building for charities for years: “The pressure began with the removal of dividend tax credits in 1997 by the then New Labour government which drastically reduced charities’ income,” the firm said. “Since then the burden has increased with negligible interest rates and yet rising demands from beneficiaries, as government spending cuts have built up.”

Brewin Dolphin argues that a blanket cap contradicts Prime Minister David Cameron’s “Big Society” campaign which is aimed at encouraging community spirit. The government should instead concentrate its efforts eradicating tax loopholes, the firm said.

While Cameron has said that wealthy individuals are abusing the system, the pressure on the coalition government is building up from the inside as well as the outside. Several members of the cabinet of both the Conservative Party, the senior coalition partner, and the Liberal Democrats, the junior partner, are reportedly concerned about the tax move.

Since the announcement on Budget Day last month, several charities have publicly stated that the measure could cost them millions of pounds.