Brown kills residential property SIPPs?

meanmachine_2

He sort of glossed over this, but am I right in thinking that residential property will now NOT be permitted in a SIPP?

Surely that's a massive U-turn? I do think the press blew it out of all proportion, but this could have a very negative impact on the housing market, if true.

Negative as in positive for anyone wanting to buy a home who isn't filthy rich, of course.

EdInvestor

Looks like it . Who'd have a pension now? You never know what might happen.:eek:

Brown bursts Sipps bubble
This is Money

THE great Sipps bubble appears to have burst following a change in the rules announced by the Chancellor today.Homeowners considering buying second properties to take advantage of tax breaks under Self Invested Personal Pensions (Sipps) after pensions simplification on 6 April 2006 have suffered a major blow.

The new Sipps rules announced by Gordon Brown in his Pre-Budget Report now exclude all residential investment properties along with other assets such as fine wines, antiques and racehorses.

The news brought a swift and furious response from pensions industry professionals. Jerome Melcer, actuarial director at BDO Stoy Hayward Investment Management, said: 'Gordon Brown has made an enormous U-turn on Sipps that has wasted thousands of hours of professional time. An entire industry has been set up to deal with property-based Sipps and now it's all been canned.

'Having said that, this is where we should have been heading all along. The Government has finally realised that investment in residential property created enormous complexity not just for themselves but also the pensions industry and now they've stripped it out entirely.

'Now, less than four months to A-Day, people have already taken action to change pension arrangements, including irrevocable decisions over pension transfers and large new contributions. These individuals will have incurred professional fees and other costs in pursuing a strategy that is no longer viable.'

Melcer added: 'Luckily there is protection for people who have already committed to buy residential property with their Sipp as their investment is protected but for anyone else trying to get involved there will now be swingeing tax penalties for doing so.'



#They've also plugged the tax free cash recycling loophole discussed here earlier, as predicted.

dunstonh

Now you know why we have been saying hold tight and lets wait and see what happens first.

There is still potentially more to come before A day.

oceanblue_3

EdInvestor wrote:

Looks like it . Who'd have a pension now? You never know what might happen.:eek:

Well, apparently, you have a pension, Ed, don't you? Isn't it one of those SIPP thingies? And didn't you start your SIPP before the prospect of investing in residential property was first mooted?

rrwfotr

Yet again the older people who are generally well off get their tax breaks sorted before the loop holes are closed. Good on yah Gordon...anyone would think he was not in Labour and in the Conservatives.

EdInvestor

oceanblue wrote:

Well, apparently, you have a pension, Ed, don't you? Isn't it one of those SIPP thingies? And didn't you start your SIPP before the prospect of investing in residential property was first mooted?

Quite right OB, I've never been a fan of the property in SIPP idea.

You might like to have a look at the Revenue release though - there seems to be a new rule on drawdown, removing the 35% tax levy on the death benefit

Would you like to confirm that my understanding is correct?

If that's so, makes drawdown even more attractive, don't you think?

al_yrpal

I am sure my daughter, who is struggling to save for her first home, will be delighted. So am I. Its time our home were just homes, not blooming investments. The only people who profit from house price inflation have been speculators, second home owners (of which I am one) and inefficient builders. Good on yer Gordon - but as for the rest of it#~***-+!
As for the so called pension industry - my heart bleeds for their bonuses.
If they feel bad they can probably stick an MVA on it.

fairenoughclough

I can't believe it, New Labour listening to common sense.


Maybe now, they'll start transferring jobs to areas where there are lots of empty houses; Liverpool, Burnley, ABSEE, maybe even start transferring jobs to areas where there are lots of empty government-body owned homes; decommissioned army, navy and air force bases.


Tell me that I'm dreaming.

oceanblue_3

EdInvestor wrote:

You might like to have a look at the Revenue release though - there seems to be a new rule on drawdown, removing the 35% tax levy on the death benefit

Would you like to confirm that my understanding is correct?

If that's so, makes drawdown even more attractive, don't you think?

Yes, it certainly looks as if you're right. Here's the link


http://www.hmrc.gov.uk/pbr2005/pensions-simplification.pdf

Nevertheless, as I'm sure you'll agree, drawdown still isn't going to appropriate for everyone.

al_yrpal

fairenoughclough wrote:

I can't believe it, New Labour listening to common sense.


Maybe now, they'll start transferring jobs to areas where there are lots of empty houses; Liverpool, Burnley, ABSEE, maybe even start transferring jobs to areas where there are lots of empty government-body owned homes; decommissioned army, navy and air force bases.

"They", Mrs Thatcher actually cancelled the Industrial Development Certificate in 1981, triggering the concreting over of the South East. The massive tide of immigration then started, that has lead to so much overcrowding, traffic chaos, and rocketing house prices. That's why 50% of the population down here seem to be planning escape to France

Not a chance of what you are looking for. Brown is more Tory than the Tories.

JCL

rrwfotr wrote:

Good on yah Gordon...anyone would think he was not in Labour and in the Conservatives.

LMAO!

What is it Labour stand for again??? Not a lot.

Give me the Conservatives any day.

Pensions simplification - plug pulled on residential property and alternative investments

In a bombshell announcement, the Chancellor has stated his intention to impose punitive tax charges where "self-directed" pension schemes such as SIPPs and SSASs invest directly in residential property or other "prohibited investments" such as fine wines or vintage cars after A-Day.

The new measures could mean tax charges of up to 70% on prohibited investments - with the ultimate threat of scheme deregistration, and a further 40% tax charge on the total assets, where prohibited investments exceed 25%.

Pooled investment in residential property vehicles such as the Government's proposed new real estate investment trusts will be allowed, but there will be measures to prevent abuse via indirect investment (for example, by using a pension scheme to buy a controlling interest in a residential property investment company).

The wider pension investment powers, which until today were not thought to be in doubt, were one of the most widely welcomed Pensions Simplification changes - stimulating sales of self-investment products in the run-up to A-Day. Advisers now face the prospect of having to revisit the advice given to thousands of clients.

Brown is an idiot.