Thursday, December 08, 2005



Welcome to Robert Maas's blog. I should start with who I am. I am a Chartered Accountant specialising in tax. I am Head of Tax of Blackstone Franks LLP. Have a look at our website I am an avid fan of West Ham United FC and a less avid fan of the Chicago Cubs. My other main interests are jazz, real ale and malt whisky. Accordingly my blog might touch on any of these matters - or indeed on anything else - but will mainly be about tax.

Gordon Brown delivered his Pre Budget Report on Monday 5 December. I am intrigued at the degree of dismay that has been caused by his annoucement that pension schemes ought to be set up to provide pensions, not to enable assets to be passed on free of inheritance tax or to subsidise second homes and other lifestyle type assets.

Of course this is typical Gordon Brown. The word babies and bathwater come to mind. A pension fund, like an individual, ought to aspire to a balanced portfolio of investments and it is an odd investment strategy that excludes property. It is also obviously an unfair strategy that allows pension funds for the reich to own commercial properties but those of the less well off, who cannot afford to buy a commercial property but could afford a residential one, to be excluded completely from the property market. Nevertheless I find it hard to feel any sympathy for a person, such as I noticed reported in the Times of 7 December, who has bought a residential property with the intention that next year he will sell half of it to his pension fund and the year after that he will sell the second half to his pension fund. That suggests to me that the property is intended to be the sole asset of the pension fund. If so, that seems to me to be a ridiculous invetment policy for a pension fund, and the individual concerned should be grateful that the Chancellor wishes to dissuade him from such an odd investment strategy.

I find it amazing that at a time when there are real fears about whether people will have money in their retirement that anyone is even contemplating putting into their pension fund their holiday home or their wine cellar. The whole point of giving tax incentives to pension schemes should surely be to grow the fund so as to provide a pension when the individual eventually retires. A fund that produces no income seems to me to miss the point. It certainly does not take advantage of the tax exemption within the fund or income received by the fund.

It seems equally sensible for a government that is seeking to extend home ownership not to at the same time offer incentives to the more well off to buy starter homes at a 40% discount to the price that potential owner occupiers have to pay.

What does not make sense is to ban residential investment completely. We of course await the legislation, but it wil be very sad if we are back to the current position where a small self administered pension scheme cannot buy a shop with flats above or cannot even buy a commercial property if the building incorporates a flat for a caretaker.


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