David Cameron has given the strongest signal yet that the proposed tax relief cap on charitable donations will be dropped.

In a wide-ranging interview with the Daily Mail, published today, the Prime Minister claimed the issue would be “dealt with”.

He told the newspaper: “It will be dealt with. I’m not going to give a running commentary, but it will be dealt with,” he said.

Sir Stuart Etherington, chief executive of NCVO, said in response: "This is the most encouraging sign yet that the diverse chorus of disapproval against the cap is being heeded by the highest levels of government.  We hope that the Prime Minister’s comments signal that this unloved policy is finally going to be put out of its misery."

Cap 'will cost society up to £1.5bn'

Cameron's comments came just as Oxford Economics published research estimating that the cap would result in £500m of lost donations and that the multiplier effect of this would equate to between £1.3bn and £1.5bn in lost benefits to society.

It would also see up to 10,700 jobs lost in charities and as many as 18,800 jobs across charities and the wider UK economy, according to the research commissioned by Charities Aid Foundation.

You can read the summary findings here.

The proposed cap, which will limit reliefs on donations to a quarter of the donor’s income or £50,000, whichever is higher, is aimed at preventing wealthy citizens from reducing their tax bills by giving large sums to charity.