The Chancellor announced in the March 2012 Budget that, from 6 April 2013, the government intended to introduce a cap on otherwise ‘uncapped’ tax reliefs, limiting the amount that can be claimed by an individual to 25% of income, or £50,000 if greater. Since then the government has issued a brief summary of its proposals, but a full consultation document is not expected until the summer.
The intention is that reliefs currently subject to their own cap, like those for pension contributions or for investment under the Enterprise Investment Scheme, will be unaffected. The government’s target is reliefs that can currently be deducted against total income, such as ‘sideways relief’ for trading losses, deductions for interest and (most contentiously) relief for Gift Aid donations.
Our new factsheet examines the proposal and its implications in more detail. If you have any questions about the issues raised, please contact us.