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Budget 2012: Osborne introduces cap on income tax relief
by William Robins on Mar 21, 2012 at 13:52
The government is to introduce a cap on income tax relief for anyone claiming more than £50,000 a year.
Chancellor George Osborne said the government would introduce a limit on all uncapped income tax reliefs, in a bid to raise an estimated £720 million by 2016 -17.
For anyone seeking to claim more than £50,000 of reliefs, a cap will be set at 25% of income.
It has been introduced to target the practice of setting-up loss making businesses purely to claim tax relief.
'This will increase effective tax rates and help ensure that those with the highest incomes pay a fairer share,' the government said in the Budget.
The limit will include, but not be restricted to:
- Loss reliefs against total income
- Qualifying loan interest
- Gift Aid and Charitable gifts of land and shares
Osborne said the measure would not be extended to those reliefs that are already capped. The government said it would seek to ensure the cap did not impact on charities that rely on large donations and there would be measures to protect philanthropic giving.
The move follows the confirmation by the chancellor there will be no cut to pensions tax relief.
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