Brown's Sipps U-turn leaves us gasping

Without doubt one of the most controversial announcements in yesterday's Pre-Budget Report from the Chancellor, Gordon Brown, was the inexplicable U-turn he performed on Sipps, removing property investment from the possible savings schemes and at a stroke costing the investment industry potentially millions in wasted time and resources spent preparing for the measure, which was due to be introduced next April

Many within the industry are furious with the Government not so much because of the decision but because the change has come so late in the day.

Jerome Melcer, the actuarial director at BDO Stoy Hayward, summed up the industry’s feeling when he said: "Gordon Brown 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."

Read Andrew Ellson's helpful Q&A on Sipps here.

Read Christine Seib's report on initial reactions to Gordon Brown's about-face here.

What none of this explains, of course, is what the Treasury thought it was doing in the first place: after all, the option to get 40 per cent tax relief on an investment property - whether it be a holiday home or buy-to-let - seemed an absolute no-brainer for most investors, while also likely to add plenty of fuel to the housing market.

So who was the Treasury wonk who came up with this bright idea? We may never know.

Comments

[Rita & PIeter Grootendorst]

We are fed up with the government's incompetence and lack of accountability. It has created needless problems for us, increased the national debt burden and is seriously disadvantaging my commuter husband.

Only the public sector, and uncivil servants, whose pensions we have to underwrite involuntarily are laughing all the way to the bank or those earning city bonuses. The rest of us are being treated like indentured servants, and government sticky paws are digging ever deeper into our wallets.