SIPPs & SSASs Flashcards
What are the benefits of property investment within a SIPP/SSAS?
- Rent paid by employer is a business expense for tax purposes.
- Rent is not taxable in the hands of the trustees.
- Rent paid will grow for benefit of member & doesn’t count towards AA.
- No CGT when trustees sell property.
- Property is protected from creditors.
What are the drawbacks of property investment within a SIPP/SSAS?
- An illiquid asset, may be hard to sell. Cannot sell part of the property.
- Can be a high % of scheme assets therefore reducing diversification.
- Employer must pay a commercial rent.
- High costs for the scheme, I.e. Rent reviews, property maintenance.
- Property can’t be used as collateral by the company.
What are the four types of SIPP?
- Full SIPP
- Platform SIPP
- Hybrid SIPP
- Deferred SIPP
What types of self investment are available within a SIPP?
FCA authorised collective funds.
Securities listed on a stock exchange.
Unlisted shares.
Commercial property.
Bank deposits.
What type of property are taxable within a SIPP?
Residential property & associated land.
A beach hut.
Timeshare.
Student lets.
Ground rents.
Chattels.
What types of property are non-taxable within a SIPP?
Childrens home.
Halls of residence.
Hospices.
Prisons.
Hotels (if owned in its entirety)
Caretakers flat.
Gold bullion.
What is the tax position of underlying investment funds within a SIPP?
No liability to income tax.
10% tax dividend credit on UK & some overseas dividends cannot be reclaimed.
No CGT on gains.
What is the maximum a SIPP/SSAS can self invest into their own company (sponsoring company)?
Under 5% of scheme assets in any one sponsoring employer.
Under 20% of scheme assets where the share holdings relate to more than one sponsoring employer. (The 5% rule still applies to any one company). I.e. Up to 4 employers, up to 5% in each.
How much can a SIPP or SSAS borrow?
The loan must not exceed 50% of he net value of the scheme assets at date of loan.
The scheme asset value must also take into account any previous borrowing.
So…. The net scheme value minus existing borrowing
divided by 2
Minus the existing borrowing
= Maximum amount available to borrow.
What are the key factors associated with SSAS schemes lending money to sponsoring employers?
Only available from occupational schemes.
Must not exceed 50% of schemes net assets.
Must be secured as a first charge.
Interest rate must be at least 1% over average base rate of six main clearing banks.
Cannot last longer than 5 years. Can be rolled over once.
Must be repaid at least annually in equal instalments of capital and interest.
