Second Home Tax Break Scrapped
Sudden U-turn by government over second home pension tax break
7th December 2005
The government have announced a sudden climbdown over plans to allow property to be invested in a personal pension plan, which would have effectively given second-home buyers a 40% tax break on their purchases.
The plan was due to come into effect in April, allowing property to be classed as a pension investment under new Self-invested Personal Pension (Sipp) rules, and could therefore be set against income tax.
The proposal attracted widespread criticism, not least from rural housing campaigners who said that it would spark a rush of second home buying in the countryside, pushing prices even further out of reach of local buyers.
The sudden u-turn has caused astonishment in the financial advice industry, as complicated pension and investment plans already made will need to be reformulated before April.
The government said that it had withdrawn the plans because of 'abuse' by the tax avoidance industry, but has said there will be some protection for those already committed to buying property off-plan.
Read More: Money Guardian: Sudden scrapping of tax break for houses in personal pensions
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