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Massive cost of Sipp buy-to-let

Investors holding buy-to-let properties in Sipps could cost the Government £4bn, the equivalent of a 1p rise in income taxIf just 10 per cent of BTL investors move their properties into Sipps, the cost of tax relief on these properties will severely dent Treasury cashflow, warns Standard Life senior technical manager John Lawson.

The banks would be the big winners as many investors would need to borrow money to meet the cost of this.

Lawson says investors can build a pension fund to buy the average UK property within two years by making maximum pension contributions, which rise to 100 per cent of earnings after A-Day. These contributions would be grossed up and, by using a Sipp’s post-A-Day ability to borrow up to 50 per cent of the fund, investors could take advantage of tax relief.

Several providers, including Standard Life and fund supermarkets, are offering Sipp wrappers.

Lawson says: “The tax relief on 10 per cent of the buy-tolet market will add a penny on income tax. It could be a very costly exercise for the Government.”


Downing tops up

Downing Corporate Finance is raising up to 1.104m for a top-up share issue of the Aim distribution trust. This is a venture capital trust which focuses on companies listed on the Alternative investment market.

Britannia International calls on index duo

Britannia International has unveiled the guaranteed income and growth bond, a combination of a high interest account and a guaranteed equity bond. It is available to investors with at least 10,000.


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