The FT reported a "complete U-turn" by the UK Treasury as generous tax breaks were removed from the SIPPs self invested pensions.

From April 6 next year, pension laws were to be relaxed allowing those saving for their retirement much greater freedoms over what they could hold within their pensions. The rule changes were expected to lead to a boom in self invested personal pension schemes (Sipps), pensions with wide investment freedoms.

Residential property and assets, such as fine wines, classic cars and even stamp collections were among the assets which were expected to be allowed to be held in pensions after April 6 and qualifying for income tax relief up between 22% and 40%.

However, in a technical note accompanying the pre-Budget report, the government suddenly announced it would remove the tax advantages for residential property and other assets, such as fine wines, art and antiques. The move will remove any tax advantages of holding residential property directly or other exotic assets within a Sipp.

The government said the move was aimed at ?preventing people benefiting from tax relief in relation to contributions made into self directed pension schemes for the purpose of funding purchases of holiday or second homes and other prohibited assets for their or their family?s personal use.?

The FT reported that tax experts expressed surprise at the government?s U-turn. ?This is a complete turnround. It is extraordinary,? said Mike Warburton, tax partner at Grant Thornton.

Simon Philip, tax partner at Deloitte said: ?The dream is over for those hoping to enjoy tax subsidised wine drinking and horse racing but it was fun while it lasted,?

Terry Walker of Spanish property specialists, PropertyInSpain.Net said: "This decision might have the opposite effect to what the Government intended. It could see more people buying sunbelt homes with their own money and low cost euro mortgages, rather than putting the purchase through a SIPP and boosting their pension. Spain with the biggest share of the second homes market could see a inrush of new sales from the start of next year as UK buyers focus on the equity growth and lifestyle benefits rather than their tax and pensions.

"It could be that holiday breaks have more appeal than tax breaks for many families" Spanish Property News

Posted by Mike Smith on December 13, 2008 at 12:00 AM

About Mike Smith
Mike Smith is affliated with Elite Team Realty, which is located in Brea, CA. For further assistance please use the contact information located on the right.




As of 05/20/12 the Mike Smith RePage is ranked at 5,887 with 370 points.