Don’t get me wrong, I’m not one to sniff at a great idea to make us less reliant on non-bio fuels but it will not be easy to achieve on the kind of scale needed to make a real impact.
The PBR contained snippets of good news for our industry such as changes to the real estate investment trusts to be included in the 2007 Finance Bill. These will make it easier for newly established firms to join the Reit regime as it will effectively give Reits a one-year period of grace during which they will not have to satisfy the 75 per cent income and asset test.
The Reit entry charge of 2 per cent of the market value of properties held will be levied at the end of the first year. This is not small fry and will cost millions for big property companies. The changes partly address concerns over the difficulties that new companies seeking to enter the market could face under current legislation including the potential double tax hit (stamp duty and Reit conversion charge) on accumulation of a property portfolio and the cost implications of obtaining a full listing during this incubation period.
But what about the demise of stand-alone pension term assurance and alternatively secured pensions? Both have been sent packing months shy of their first birthday but is this a surprise?
Looking at my 1983 Royal Life technical manual, lump sums on death before 75 or pension term assurance can only be paid by an insurance company or friendly society. They cannot be provided by other pension providers’ schemes. The cover can be written under trust and broadly the procedure to follow is the same as for ordinary life policies, not pension business. PTA has always been life insurance and not a pension.
I know senior life and pension technicians who wrote to the Treasury to confirm that PTA would be treated as a pension policy under and benefit from higher-rate tax relief. The reply was yes. But as any person who loves financial products as I do knows, this is an anomaly.
The U-turn on Asps, claimed by Treasury economic secretary Ed Balls to be for certain religious groups only, was a fascinating story. At least the opportunity remains for drawdown beyond 75 and investors will be able to place commercial and residential Reits in a self-invested personal pension, filling the gap created by the withdrawal of residential property as a pension asset. Please Mr Chancellor, can we have a straight-ahead 2007 for Christmas?
Kim North (email@example.com) is a director at Technology & Technical.