HL Deb 24 January 2005 vol 668 cc139-40WA
Lord Oakeshott of Seagrove Bay

asked Her Majesty's Government:

What is their estimate of the likely loss of tax revenue in 2006–07 allowed to be included in self-invested pensions plans with effect from April 2006; and on what assumptions that estimate is based; and [HL738]

Why they intend arising from the relaxation of the rules on assets to allow United Kingdom taxpayers to invest in overseas properties through self-invested pensions plans with effect from April 2006. [HL739]

Lord McIntosh of Haringey

These questions relate to one aspect of the reforms to pension tax simplification, which sweeps away the eight existing complex tax regimes and replaces them with a single universal regime for tax-privileged pension savings. This new regime will provide greater flexibility to some 15 million pension savers.

Currently most pension funds are permitted to invest in residential property, including property overseas, and many do. The new simplified regime will also allow small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) to invest in residential property from 6 April 2006. These are specialist pension vehicles, typically taken out by wealthier individuals and are held by only around 200,000 people compared to over 15 million contributing to pensions. Creating a single set of allowable investments across all pension schemes fits the requirement to create a single regime for tax privileged pension saving and corrects an existing distortion by giving investors greater choice rather than creating a new one in favour of property.

Any additional cost to the Exchequer will depend on uncertain behavioural responses to these reforms— whether or not individuals who will be able to invest in a wider range of assets choose to invest more than they do now.

The Government will keep this aspect of the tax system, as with all others, under review.