SIPP allowable investments

Since the legislative changes to pensions at A-day, there are now many more opportunities open to today’s investor. One of the features of the new regime is that very little is banned. The approach taken by the legislation is to impose tax consequences on some transactions and leave the choice of the investment to the investor.

The rules are generally more flexible and accommodating than they used to be, the new regime offers several new opportunities to invest in a wide range of assets and exciting investment opportunities.

If HM Revenue & Customs allow it, so do we.

Annuity Supermarket will strive to get you the best annuity rates from the Open Market.

It is our policy not to impose Company rules on top of Revenue rules. As a result we can proudly claim ‘No other SIPP advisers allows more’.
Examples of some of the investments members have taken out can be found here:


Commercial Property


Deposit Accounts


Stock Exchange listed companies (listed on a HMRC or FSA recognised stock exchange)

AIM and OFEX Companies

Unit Trusts and OEICS (listed on a HMRC or FSA recognised stock exchange)

Government Securities

Fixed Interest Securities

Quoted Debentures and loan stocks

Shares in unquoted private companies

Offshore funds

Real Estate Investment Trusts (REITS)

Offshore funds

Hedge Funds

Insurance Company managed funds and unit linked funds

Second Hand Endowment Policies

Companies on an overseas exchange recognised by H M Revenue & Customs

Traded futures and options (relating to stocks and shares on a recognised exchange)

Contracts for Differences (CFD)


The member is responsible in conjunction with their Financial Adviser for choosing investments that are suitable for their individual circumstances.

If any transaction is to be carried out between the Registered Pension Scheme and the policyholder or any person connected with the policyholder, the transaction must take place at market value.

Group SIPP – Investing in Commercial Property

A Group Sipp can be used to hold a wide range of investments from shares, gilts, unit trusts, investment trusts, insurance company funds and commercial property (but not private property). A SIPP can be used for income drawdown.

This is particularly useful for owners of small businesses, who can buy premises through their pension funds. There are attractive tax advantages in using the fund to buy commercial property. The rental income is received tax-free by the fund and when the property is sold, which must be before the pension is drawn. There is no capital gains tax.

Someone with their own business might decide to use the property assets – such as offices, factories, agricultural land and warehouses – as part of a retirement nest egg. In this case, they would pay rent directly into their own pension fund rather than to a third party – usually an insurance company.

For specialist advice on SIPPs,  pension drawdown or annuity rates call 0800 043 0725

How can I invest in property via a SIPP?

One of the attractions of SIPPs is that they can be used to invest and develop commercial property, such as offices, industrial units or shops. Your pension fund does not even have to be large enough to buy a property outright as you can borrow up to 50 per cent of the fund’s net value.

In other words, if it is worth £150,000, you could borrow another £75,000 to buy a property for around £225,000. The rent from the property can be used to cover the mortgage repayments. If there is no mortgage, the rent will remain in your SIPP fund and can be used for other investments.

However, it is important to bear in mind that the costs of buying and managing a property in a SIPP can be fairly hefty. SIPP providers typically quote fees of between £500 and £750 for property purchase and there will also be legal and valuation fees to pay. In addition, ongoing annual management charges will be payable.

It is not possible to invest directly in residential property via a SIPP, although a commercial property with a residential element such as a caretaker’s flat may be permitted.

An alternative for those who want to invest in residential property may be to do so via property syndicate or collective fund. These schemes are allowed within SIPPs providing they have at least 10 investors and own at least three different properties worth a minimum of £1m in total.

Not all SIPP providers will currently accept these schemes and before investing, you should look carefully at how they work. Find out the level of borrowing as this will increase the risk and the amount you may have to pay for the maintenance of the properties as well as the costs to be covered when there are ‘void’ periods between lettings. Most importantly of all, you should find out your options for selling your investment.

Other property-related schemes which may be available within a SIPP are buy-to-let hotel room investments in the UK. It has been suggested that similar schemes abroad including ski chalets may also be suitable but some leading SIPP providers still feel this is a grey area. As the trustee, your SIPP provider has the final say on what can go into your pension.

By far the greatest demand for property investment within a SIPP is from small business people who want to buy their own business premises. Changes to the pension rules in April 2006 mean such purchases are now possible even if the property is already owned by the investor or someone connected to them.

Buying your own business premises within a SIPP can have several tax advantages. The rent paid into your SIPP is free of tax because it is a tax deductible expense. There will be no capital gains tax to pay on the property when it is sold within the pension fund and if you die before age 75 and before you start drawing your pension, your beneficiaries can receive the proceeds of the sale of the property free of inheritance tax.

To find an Independent Financial Adviser that can advise on SIPPs call 0800 043 0725

Self Invested Personal Pensions SIPPs


The basics

Fancy a Rolls Royce pension, rather than the pension equivalent of a Ford Mondeo or a Smart car?

Then take a look at Sipps – the luxury model of the pensions market, which comes with all the bells and whistles you could dream of, compared to personal pensions (think Ford Mondeo) or stakeholder pensions (think Smart car).

But remember that luxury comes at a price and that while we may all yearn for a de-luxe car or pension, they may not necessarily suit our needs, or more importantly, our pocket.

Self invested personal pensions (Sipps) are personal pensions which allow you to choose where you want your retirement savings to be invested, instead of leaving a pension company to make the decisions.

You can hold a wide variety of investments in a SIPP, from investment funds and shares to commercial property and futures and options.

SIPPs have been around since the early 1989, but until recently were only economic for those with very large pension funds because they were so expensive. Increasing competition in recent years has brought charges down and made them more accessible.

Changes in the pension rules in April 2006 (known as the A-Day changes) allowing increased contributions have also made it easier to set up a Sipp. In addition, more people are now turning to SIPPs when they reach retirement, if they want to take an income direct from their pension fund, in the form of a so-called ‘unsecured pension,’ which gives them greater control over how and when they take income from their fund.