The Budget, introduced by the Chancellor George Osborne on 21 March, introduced several changes to the current tax system, including a cap on uncapped income tax reliefs which will take effect on 6 April 2012. From that date onwards, anyone seeking to claim more than £50,000 of reliefs will be capped at 25% of their income. Tax reliefs which are already capped will not be affected.
As a consequence of the introduction of this new cap, individuals who wish to make large donations to institutions may be deterred if they are no longer able to offset the value of their investment against their income tax. The Chancellor included a statement in the Budget that the Government will explore ways with philanthropists to ensure that this does not impact significantly on charities that depend on large donations, but no mention is made in relation to higher education institutions which may also rely heavily on individual donors. It remains to be seen whether this new change will see a significant decrease in individual donations.