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Brown sinks Sipps

Chancellor Gordon Brown has axed property Sipps in a shock U-turn that consigns two years of hype and millions of pounds to the scrapheap.

In his pre-Budget report on Monday, Brown stripped away tax relief on residential property going into pensions after A-Day and branded it a prohibited asset class incurring tax. The shock move also effect- ively bars exotica, such as fine wines, art and antiques.

Industry figures say millions of pounds have been spent on marketing and system development for the planned Sipp change which was set for next April while thousands of adv- isers will have to revisit clients to ensure they are best positioned for A-Day.

The impact on the buy-to-let market is expected to be significant, with the Council of Mortgage Lenders estimating that one in three deals after April were going to be Sipp-driven.

Standard Life head of pensions policy John Lawson says the firm will lobby Parliament for buy to let to be allowed back in to Sipps. Standard has taken in over 1bn in its Sipp offering less than a year after launch.

Lawson says: “Buy to let should definitely be in there as a good investment that can provide a good income stream. It is absolutely ridiculous and shows a total disregard for advisers and providers. The cost to the industry could potentially be huge.”

Politicians have been scathing of Brown’s about-face, with Liberal Democrat Work and Pensions adviser Rachel Spring saying the Chancellor had been warned for the past two years that the measures would be massively expensive and would favour the wealthy but to change tack at this late stage is arrogant.

sSuffolk Life marketing director John Moret says the relationship between the Government and the financial serv- ices industry has been harmed by Brown’s 11th-hour U-turn.

Independent pension pol- icy adviser Ros Altmann says: “This is utterly shambolic. Millions of pounds have been put into preparing for this. I think that some consumers may definitely have a case for misselling if they feel that they have been urged to buy property in anticipation of A-Day. I think that the industry should sue Gordon Brown for their losses.”

Evolve Financial Planning principal Antony Williams says: “We did not advise any clients into this sort of deal as we decided it was rarely in their best interests but I am aware of IFA firms and property companies which have organised and advised on deals involving buying property on the back of these new rules.”

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