Deputy Prime Minister Nick Clegg has given the clearest indication yet the government will be forced to backtrack on its plans to cap tax-free charitable giving.
The mooted plans would see charitable donations capped at £50,000 a year or at 25% of an individual's income, whichever is higher.
But Clegg told the Today Programme the coalition "have some time" to come up with a compromise, following widespread criticism from charities and philanthropists.
There would be "some limit" on tax-free giving - potentially closer to the 50% adopted in America rather than 25% in this year's Budget.
He said the government should encourage philanthropy, but added there was "a simple principle at stake". "If you have an unlimited allowance, you are asking lower-income taxpayers to fund that allowance, that tax break," he said.
He praised the raising of the personal allowance for creating greater fairness in the tax system, calling it "one of the biggest, boldest and most radical changes in the personal tax system for a very long time" - though he said this had been "somewhat lost" in post-Budget coverage.
"We are doing things which will help millions of people," he said.
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