Jon King, chairman of Safe Home Income Plans (SHIP), welcomed the announcement that genuine equity release schemes would remain tax exempt.
He said: “We look forward to continuing to work with the Inland Revenue to ensure that such schemes are not impacted by the POAT legislation.”
The following parliamentary question was asked by George Osborne MP, shadow chief secretary of the Treasury, and directed to the Chancellor of the Exchequer: “What assessment has he made of the likely impact of the taxation of pre-owned assets on equity release; whether the reversion scheme equity release plan will be affected by the changes made in the Finance Act 2004 to the taxation of pre-owned assets.”
Dawn Primarolo, the Paymaster General, answered: “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 to 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.”
Colin Taylor, managing director of Key Retirement Solutions, said: “We are delighted with this announcement as we believe that POAT was never aimed at catching vulnerable elderly people who have chosen reversion plans to finance their retirement.
“We have been actively campaigning on this issue and are really pleased with this announcement.”
