UK Conservatives Propose Tax Relief For University Donations

by Robert Lee, Tax-News.com, London

16 August 2007

The UK's Conservative Party want to give tax relief to wealthy families and businesses who donate money to British universities, as part of a plan to increase the UK's international competitiveness.

John Redwood, head of the party's economic competitiveness policy unit, revealed this week that the Tories want to change the tax system, in order to allow universities to tap into more sources of funding and compete with more lavishly funded educational and research institutions in other countries, particularly the United States.

According to the Financial Times, the proposal would let companies offset the costs of contributing revenue to a university against corporation tax, and would permit individuals claim full income tax relief through self-assessment.

The new idea forms part of a plan to improve the UK's economic competitiveness by cutting a huge swathe of regulations and legislation that Redwood says are holding back UK businesses. This plan, due to be announced officially on Friday, would save businesses some GBP13 billion and, says Redwood, would amount to "a tax cut by any other name".

Redwood told Bloomberg in an interview that: "We're producing 21st-century policies for a country that's not competing well enough."

He went on to add: "Businesses are paying too much to government, some in the form of taxation, some in the form of all these costs of licensing fees, regulations and so on. That will be money that business could spend on new factories, new schools and new jobs."

The incumbent Labour government has sought to increase universities' incentives to attract private funding by pledging matching contributions. However, the government's own figures show that private investment in higher education in the UK is 0.3% of GDP, while it is 1.7% in the US.

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