“Equity Release Would Seem the Logical Answer to Government Changes”
The “Emergency” Budget outlined by Chancellor George Osborne this week (22 June 2010) looks set to affect most people in the UK because of the rise in VAT. However, according to Andrea Rozario, director general of SHIP (Safe Home Income Plans), it could be the over 55 year olds that suffer the most.
VAT Rise Affects Us All
VAT will rise to 20% in January 2011 in a move that will affect everyone in the country. However, this has been off-set by a £1,000 allowance increase on income tax and a boost for state pensions. Yet, Ms. Rozario said:
“While the emergency budget did not specifically mention equity release, it did announce a number of measures that have the potential to significantly impact the sector. Chief amongst these are the increase in VAT from 17.5% to 20% and the review of public sector pensions.”
Equity Release Could Help Affected Over 55’s
Based on a policy of fixed income for over 55 year olds, Ms. Rozario continued by stating that this demographic might feel the pinch of the 20% VAT the most.
“Over 55s in the UK often have a relatively fixed income with spending weighted towards VAT-able products and significant equity in their homes. The changes outlined in the budget mean that they will suffer from VAT increases eating into their income and then their families will be hit by death duties when they receive their inheritance.”
This could force many homeowners to seek alternative income and equity release could be such an option. Ms. Rozario concluded by saying:
“Equity release would seem the logical answer to many of these issues and we believe that the Government changes will lead to more and more people considering equity release as an integral part of their pension planning.”
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