New figures released by the Treasury show that 6% of £10 million-plus earners paid less than 10% in tax and another 3% came in below the basic 20% rate. Fewer than three quarters paid more than 40%.
These findings come after widespread backbench revolt over capping the tax breaks on charitable giving and a call for action to prevent the top-earners exploiting the relief system.
A recent poll shows that two thirds of Conservative and Liberal Democrat MPs oppose the measure George Osborne announced in last month’s budget.
The tax relief on donations, which the Government says is necessary to tackle tax avoidance, is to be capped at £50,000 or 25% of a person’s income, whichever is higher, from 2013.
Forty-six out of 71 MPs asked on behalf of the Charities Aid Foundation said that charity donations should not be subject to the new limit.
Tory treasurer Lord Fink, who himself donates generously to UK charities, said the change would lead to wealthy philanthropists giving less.
Another Conservative MP, Zac Goldsmith, said his party had “declared war” on charities, which play a key part in the Government’s Big Society project.
Former Prime Minister Tony Blair has joined the backbench outcry. “This is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it,” he wrote on HuffPost UK today.
However, foreign Secretary William Hague defended the cap, saying it aims to prevent the super-rich exploiting the system to pay almost no income tax.
Exchequer Secretary David Gauke has hit back at those opposed to the cap on tax reliefs. He told the BBC Radio 4 Today programme: “We don’t think it is entirely fair that the tax system, as currently designed, does mean that there are some very wealthy individuals who are essentially able to take themselves out of the income tax system.”
Defending the planned cap on tax reliefs on charitable donations, Mr Gauke said it was expected to bring in between £50m and £100m a year out of the £300m of additional revenue.
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