Introduction
Ultimately a Sipp is a personal pension where investors choose to make their own investment decisions.
In recent years the Sipp market has evolved into two distinct parts: the platform market, providing investors with more standard investment choices centred around collectives, and the independent market, mostly made up of the original bespoke providers that offer open access to a much wider investment market and assets not normally available through a platform.
HM Revenue and Customs does not provide a list of allowable investments, but deems certain types of asset, such as residential property or vintage cars, as taxable property therefore making them unattractive for investment within a pension.
As a result of this treatment from HMRC, the majority of Sipp providers will not permit investments that risk being defined as taxable property.
A Sipp can also borrow up to 50 per cent of its net value in order to invest further, most commonly when the investor is purchasing a commercial property as this gives a lender some security for their loan.
This guide will explore recent rule changes for Sipps, detail what advisers need to consider when contemplating a transfer to this vehicle and explain some of the regulator’s concerns about this product.
Contributors of content to this guide are Charlene Edwards, technical services consultant at AJ Bell; Paul Evans, pensions technical manager of Suffolk Life; Chris Marshall, senior technical specialist at Hornbuckle and Matthew Rankine, director of sales and marketing at Liberty Sipp.