Following two months of pounding from philanthropists, charities, and politicians across the ideological spectrum, Britain’s government announced Thursday that it is dropping its plan to limit tax deductions on donations, according to The Guardian and The Independent.
The Treasury said it would retain a planned cap on overall tax relief for high earners of $77,000 or a quarter of income, whichever is greater, but would exempt charitable gifts from the calculation. Critics had said the cap would deter major donations and add to the hurt nonprofit groups face from the weak economy and government spending cuts.
“It is clear from our conversations with charities that any kind of cap could damage donations and, as I said at the [release of the] budget, that’s not what we want at all. So we’ve listened,” said Chancellor George Osborne.
The government, which attempted to frame the cap as a step against tax avoidance by the wealthy, had been expected to hold further discussions with charities over the summer and announce concessions later this year. Nonprofit leaders hailed the immediate reversal, with Stuart Etherington, CEO of the National Council for Voluntary Organizations, calling it “a great day for philanthropy.”