Inland Revenue Confirms That Equity Release Schemes Are Not To Be Subject To Pre-owned Asset Tax -Ship Comment

Further to meeting with SHIP to end recent speculation that Home Reversions could be subject to pre-owned asset tax (POAT) when it is introduced in April 2005, the Inland Revenue has confirmed via Parliament that this will not be the case.

Hansard confirms (see Editors Notes for full text) that a parliamentary question was asked by Mr George Osborne yesterday (10th November), to which the reply was given by Dawn Primarolo, the Paymaster General.

Jon King, Chairman of SHIP (Safe Home Income Plans), the equity release industry trade body that represents over 90% of the sector, commented:

“This is very positive news and categorically confirms that the Inland Revenue has no intention to target genuine equity release schemes. We look forward to continuing to work with them to ensure that such schemes are not impacted by the POAT legislation.”

Editors Notes

Hansard Text:

Mr George Osborne: To ask the Chancellor of the Exchequer (1) what assessment he has made of the likely impact of the taxation of pre-owned assets on equity release schemes, [194291]

(2) whether the reversion scheme equity release plan will be affected by the changes make in the Finance Act 2004 to the taxation of pre-owned assets.[194292]

Dawn Primarolo: We will ensure that the pre-owned assets measures have no impact on the full range of bona fide equity-release schemes with arms-length providers while continuing to bear down on schemes aimed merely at avoidance. The Inland Revenue are in discussion with equity release providers define what provision is needed to ensure this. We will be making further announcements about the pre-owned asset regulations following the conclusion of the current consultation.