The latest charities to complain about the proposal to cap relief on tax gifts out of income are those august bodies of equality, the Universities of Oxford and Cambridge. They, like many other charities, want the taxpayer to pay the lion’s share of a donor’s gift. Let us work through some examples as to how the law would work, just to put this concept of charitable giving into context. I have kept this all simple, which leads to some unimportant inaccuracies.
Under the new law if a person were to give £1 million a year out of income gross, then the donor would pay £450,000 and the rest of the taxpayers would pay £550,000. That is also exactly the same under the old law.
Under the old law if the gross gift was £2 million the person making the gift would pay £900,000 and the poor benighted taxpayers would pay £1,100,000. The donor might also get a public honour of some description. Under the new proposal in order to make a gross gift of £2,000,ooo the giver would have to pay £1,450,000 out of his or her own income. Is that such a bad thing?
Of course the charity would benefit by the whole gross gift, but less than half would come from the person making the gift. Educational establishments like Oxford and Cambridge, Eton and Harrow are charities. Not only are they charities but they are the nurseries of the great and the good. They are now complaining. The complaints of the great and the good are loudest when their own subsidies paid by the hoi polloi are threatened. Unfortunately the complaints of great and the good in the United Kingdom are usually listened to.