April 2017 will mark the launch of a secondary annuity market and HM Revenue & Customs (HMRC) have announced that they suspect thousands of pensioners will sell up following its launch.
HMRC predict that approximately 300,000 people across Britain will choose to sell their annuity under the new secondary market.
In a tax consultation published last week, they said that there were currently around five million existing holders, and critics labelled the new regulations ‘a fool-proof plan’ for the Government, who, in giving British annuity holders increased control over their savings, will also raise bonus revenue.
The consultation stated that the British Government would be likely to receive a ‘windfall’ in the first two years of operation, followed by a gain of approximately £485 million in 2017/18 and a £475m gain the following tax year.
However, HMRC also forecast respective losses of £150m and £145m in 2019/20 and 2020/21.
Unanswered questions and doubts regarding regulation of the market and consumer protection have inspired the Financial Conduct Authority (FCA) to launch a consultation into the proposed changes.
HMRC has also predicted costs of approximately £425,000 for necessary IT changes and around £2m in staff and other costs to implement the regulation.
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