Whenever we ask readers which parts of the magazine they like best, one of the top answers (after the property pages, of course) is the short ‘Tax Dodge of the Week’ column on the personal finance page.
We’ve been filling this column every week for the last five years, but sadly I am beginning to worry for its future. You see, there is nothing Gordon Brown hates more than the idea that anyone might manage to avoid any of his taxes.
Just look at this week’s pre-Budget report. Not only did he close down a few obvious loopholes on trusts and the like, but he then made the most extraordinary U-turn on Sipps, on the basis that the plan to allow people to put property, wine, yachts and the like into their pensions was likely to be open to abuse.
Brown has closed a tax loophole that not only never existed, but that he thought of in the first place. Much more of this and we are going to have to rename our Tax Dodge column Tax Loophole Closure of the Week.
On the plus side, the backtracking on Sipps means the flood of faintly dishonest press releases we get from dodgy agencies offering us stories on how to put Bulgarian ski chalets into Sipps will finally come to an end, as will those from more respectable, but misguided sources insisting that the rush of clients into property-based Sipps will lead to another mini-boom in UK house prices.
Indeed, the debacle might even draw the housing bulls’ attention away from the excitement of the Government’s property-demand creation schemes and towards the sorry state of the new-build housing market. An article in this week’s FT pointed out that it is all very well Gordon Brown going on about how worried he is that we don’t have enough houses in the UK, and the desperate need to increase the supply of new homes to the market, but house builders can’t keep building houses if no one will buy them. And no one will buy them. Average selling prices for new homes have dropped (anywhere from 5% to 20%) during 2005, but overall sales have still fallen. You can barely give away a new-build these days.
Makes you wonder, doesn’t it? Perhaps there is no shortage of supply of houses in the UK? And perhaps once all those people who bought off-plan properties in the hope of popping them into their Sipps in 2006 have had to put them back on the market (given how low yields are these days, there’s not much point in having them if they don’t attract tax relief), there’ll be even less of a shortage of supply.
That should get rid of at least one of Gordon Brown’s worries. It’s just a shame he has so many more…