Brown kills residential property SIPPs?

deemy2004

sippnewbie wrote:

i dont really get your point. from where im sitting had i bought a house through a sipp all i'd have done is get back the tax i had already paid subsidising others. you would never have been able to claim back tax you hadnt paid and as a 'tax back' scheme it would have only benefited people who already pay way over the odds in tax, actually it would have been a removal of subsidies!!! i agree though that it would have lead to an obvious and large loss in tax revenue which is partly why i never believed it or fully planned for it.

You have your own answer within your post.

A Sipp holder on high income, who buys property for OWN use in the present, would get the tax he has paid BACK. So instead of paying say 10k pewr annum, your paying zero. Now someone working on say average earnings paying 1k tax is hence subsidising you and more likely resulting in a tax rise which would mean they would end up covering the 2-4billion annual deficit in taxes due to this type of withdrawl.

Remember pensions were supposed to be for retirement, not to buy assets to make use of in the present ! Such as works of art and 2nd, 3rd holiday homes etc...

Whereas an investment in say an company is not going to benefit you in the present, rather build your retirement fund. Which is why there IS no loss of 2-4 billion in tax revenues as the incentive is obviosuly not there to put in the extra money in mind to buying an asset that you can enjoy immediatly knowing that the government will fund 40% of the purchase price through returning your taxes that will have to be covered by those less well !!!

sippnewbie

deemy2004 wrote:

You have your own answer within your post.

you miss my point completely. i would argue that for a high rate tax payer (and lots of it to make that scheme worth doing) they are already paying more than their fair share, in effect subsidising people who pay less. its a whole other arguement but you can say that for an above average tax payer to get some tax back you are actually removing the subsidy! never mind, the peoples socialist republic lives on

deemy2004

sippnewbie wrote:

you miss my point completely. i would argue that for a high rate tax payer (and lots of it to make that scheme worth doing) they are already paying more than their fair share, in effect subsidising people who pay less. its a whole other arguement but you can say that for an above average tax payer to get some tax back you are actually removing the subsidy! never mind, the peoples socialist republic lives on

LOL.. ... Okay I see what you want is tax capped at the basic rate limit :P ... which is the implication of what you propose. Yes its a good idea for those well into the 40% band at the moment.

Though perhaps a flat tax would be fairer.

sippnewbie

deemy2004 wrote:

LOL.. ... Okay I see what you want is tax capped at the basic rate limit :P ... which is the implication of what you propose. Yes its a good idea for those well into the 40% band at the moment.

Though perhaps a flat tax would be fairer.

exactly! not really, the uk would probably be a worse place to live without the basic social safety nets we 'enjoy', even for the rich.

although in all honesty a flat rate tax would probably get more revenue in as the level at which high earners start to take steps to avoid tax would rise up the scale. everyone knows the very rich pay far less than the rest of us as a % by paying themselves dividends or 'repayment of directors loans' etc...

dunstonh

dunstonh wrote:

In reality, probably not. However, if you followed the advice and he didnt come back to you and you made a complaint, the TCF requirements would be held against him. It would certainly make it harder to justify his position.

The TCF requirements are being taken very seriously by the regulator. However, I know some firms that do not treat it at all seriously. I reckon the FSA would just love to punish some for falling foul of the TCF and this would be a good opportunity for the FSA to make an example of some. Hence, why I believe that bulletin was issued this morning (there were other points included to highlight the importance of follow up - that was just a partial copy and paste).

Just reading in yesterdays financial press that the FOS is warning advisors that they could end up liable for complaints if they didnt make clients aware that the rules were not cast in stone. Although the options would be limited as SIPPs are not covered under the FOS.

Newspapers and other media "promoting" property in pensions will not be touched. Even though they were the worse offenders and almost certainly stirred up the action of many consumers and advisors. Builders, stamp collectors etc will also be exempt.

So, all those that were critical of the IFAs on this board when we said you should wait, please remember that we were right.