Finance Bill 2013
Some reliefs from income tax such as Gift Aid are at present unlimited in the amount that can be claimed. However, from 6 April 2013 a cap on such income tax reliefs is proposed.
The cap will apply a restriction of such reliefs to the higher of £50,000 in reliefs or 25 percent of income.
Tax reliefs to be capped will include but are not restricted to: qualifying loan interest relief, gift aid and charitable donations of land and shares, and loss relief against income. There are already restrictions on loss relief for investment in partnerships, in certain circumstances, so this cap should not apply to those affected by existing restrictions. Other reliefs already subject to a cap and not caught by this new restriction would include EIS, VCT and pension relief.
There is very limited information available on this measure and until the draft legislation is published (which is expected to be later this year) it will be difficult to comment on the full impact. The target taxpayer group is also unclear.
Charities will be concerned that this measure, and the proposed reduction in the additional tax rate to 45 percent from 6 April 2013, might result in an unwelcome reduction in charitable donations.