Pre-Owned Asset Tax, also referred to as Schedule 15 of the 2004 Finance Act, is unlikely to strike elderly people indiscriminately, says IFA retirement specialist Key Retirement Solutions.
Instead, the objective of the Schedule followed by the Inland Revenue is likely to be closing down on tax avoidance through estate planning.
”We believe that the Inland Revenue will use its authority to exclude home reversion schemes from Schedule 15. The current speculation in the media is potentially causing a great deal of unnecessary worry and stress for many pensioners,” KRS says.
”We therefor call for all parties to express their concerns to the Inland Revenue in the interest of clarifying this situation as soon as possible.”
Graeme Marshall, chairman of the Home Reversion Board of Safe Home Income Plans (SHIP) - the professional body whose 18 members claim 90% of the equity release market by volume - repeats the mantra.
"SHIP believes that it was never the intention of the legislation to penalise elderly people who have taken out home reversion plans. SHIP is in talks with the Inland Revenue to discuss the exemption of home reversion plans from Schedule 15 of the Finance Act 2004. We are confident that the position will shortly be resolved in favour of existing and future reversion plan holders"
“SHIP feels that to tax home reversion plans would be wholly inconsistent with the government's decision to regulate the sale of home reversion plans under the same umbrella as lifetime mortgages."
"The decision on regulation shows that the government is in favour of home reversions being marketed as a core equity release product. It is not now about to undermine this decision through enacting legislation that specifically disadvantages people who have taken out home reversion plans.”IFAonline
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