Scottish Government Minister warns against UK charity tax relief plans

Scottish Finance Secretary John Swinney has warned against chancellor George Obsorne's plans to issue a cap on tax relief for charity donations, warning that the sector would be harmed by the proposals.

From 2013 tax relief for charity donations is to be capped at £50,000 or 25 per cent of the donor's income, whichever is higher.

Mr Osborne insists the plans are necessary to tackle tax avoidance, claiming that some of the very rich use charitable giving as a means of tax avoidance.

The plans will work by imposing a limit on the amount of tax relief a person can claim.

SNP MSP John Swinney has announced he fears the plans may damage philanthropic giving.

He told the BBC’s Sunday Politics programme: "This can create a perception that charitable giving is not welcome and that would be disastrous because there are hundreds and thousands of people right across our country that give to charities.

"I don't think we should put any obstacles or barriers in their way or create an atmosphere that suggests charitable giving is not in some way welcome or desirable."

The finance secretary's concerns echo those raised by universities, including Oxford and Cambridge, and a range of charities and philantropists from across the UK.

Senior Liberal Democrat Sir Menzies Campbell told Sky News he had written to George Osborne about the impact on charities in his capacity as chancellor of the University of St Andrews.

He said: "The proposals the chancellor has made could easily hit the kind of targets we need to seek out ourselves in order to persuade people, such as former graduates, to make generous donations.”

The Scottish Council for Voluntary Organisations has estimated that voluntary grants and donations make up 10.7 per cent of Scotland's voluntary sector income, equivalent to £470 million in 2010.