The Equity Release Council has welcomed the government decision to continue offering relief for interest on loans previously taken out to purchase life annuities, following a consultation by HM Revenue & Customs.

The decision impacts people aged 65 and over who took out loans to buy life annuities before 1999. With the youngest beneficiary now at least 85 years old, The Council and its members raised concerns that the change would have a significant financial impact on those affected – thought to be higher than the published estimate of 1,000 people – at a time when they are less likely to be able to adjust to a loss of income.

Nigel Waterson, Chairman of the Equity Release Council, says:

“We are delighted that an open and constructive consultation has led to a common sense decision – a decision which represents a victory for the elderly and vulnerable, and removes the threat of unnecessary stress and financial hardship for people of a significantly advanced age.

“People need certainty in dealing with government-backed tax incentives during retirement, as they do with many other aspects of financial planning for later life. The Council and its members work hard to promote confidence, security and life-long guarantees within the equity release industry, and we are encouraged to see the same principles have resulted in a fair decision against imposing a retrospective change to these loan arrangements.

“The decision will allow those elderly annuity customers who were banking on this income continuing – which we believe amounts to more than £500 a year – to rest easy, rather than preparing for a potential worst-case scenario where its loss might leave them facing heightened poverty. We applaud the decision and welcome HMRC’s willingness to register these views through its consultation.”