In the Autumn Statement last week the Government announced that it would not, in fact, go ahead with the recommendation by the Office of Tax Simplification to withdraw relief for interest on loans taken out to purchase life annuities. The proposal was intended to enable the repeal of complex legislation, with the OTS arguing it would affect fewer than 1,000 people.
While a highly obscure bit of financial services legislation, this area was of significant interest to one of our clients, the Equity Release Council, as several of its members had been involved in advising individuals around 20 years ago that they should take advantage of this tax relief. The proposal to withdraw it, while affecting a small number of very elderly individuals, would have led to a loss of income of around £550 per year. On behalf of the client, we argued that the negative impact of withdrawal would far outweigh the benefits of simplifying the tax code.
The Council was one of only seven organisations to respond to the consultation – and unsurprisingly it was not one of the big announcements made by the Chancellor on the 5th December. However, through valuable data provided by the trade association’s members and a clear and concise consultation response drafted by the Whitehouse Consultancy, a decent number of quite elderly people will not have the added worry of finding around £45 per month.