Oxford has joined with other universities in opposition to government plans to curb tax breaks for philanthropic giving.
The current proposals will limit tax relief on charitable donations to £50,000 or 25 percent of the donor’s income – whichever is higher.
But the plans have been attacked as a tax on philanthropy, which will discourage a culture of giving.
Currently, higher-rate taxpayers can donate an unlimited amount to charity and offset it against their tax bill to reduce the amount of tax they pay, sometimes to nothing.
Andrew Hamilton, the Vice-Chancellor of Oxford, has written a private letter to George Osborne, warning the plan “risks undermining the culture” of university philanthropy, and pointing out how reliant UK universities are on charitable donations.
Oxford has raised £1.25bn over the past eight years, much of which was made up by donations that would have exceeded the proposed limit.
A spokesperson for the University said: “We are certainly concerned about the potential impact in higher education, where the government’s own policy emphasises the role of private and philanthropic investment rather than the public purse.
“A step that penalises the government’s own approach seems ill-considered. The generosity of Oxford’s donors provides huge public benefit, contributing to teaching, research and student bursaries.
“We have done our best, along with other universities and charities, to foster a culture of giving in the UK, and this move risks undermining that culture.”
Nicola Dandridge, Chief Executive of Universities UK, said: “Universities raise considerable sums from philanthropic gifts, £560m cash in the last year.
“These donations make a major contribution to the support universities can offer students through bursaries, scholarships and improved facilities such as libraries. It also contributes to advancing research.
“Because universities are the preferred cause of major donors (gifts over £1 million), we anticipate that they would be particularly hard-hit by the change in the budget.
“After a period in which universities have stepped up their game in fund-raising, this could undo some of the excellent progress they have made.”
But the government has so far defended the proposals.
A Treasury spokesperson said: “The Budget makes clear that we want to ensure genuine charities that rely on large donations are not hit significantly, which is why we said we’d spend the next year working with the charity sector and philanthropists on the details.
“The Government wants to create a US-style culture of giving. The US achieves this while having minimum rates of income tax for wealthy people.”
Treasury Minister David Gauke added: “At the moment we have a number of tax reliefs that are uncapped, and as a consequence there are some very wealthy individuals who pay very little in Income Tax, and in some cases don’t pay any Income Tax at all.
“Now, whereas people earning £10,000, £15,000, £20,000 a year pay 20 percent, we don’t think it’s 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. That is why it is fair to cap tax reliefs for the wealthy.”