SIPP for commercial property?
WHA
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I wonder if anyone can help.
I currently have three pensions (2 with Scot Eq by previous employers) and one with Norwich Union (a stakeholder). The total current fund transfer value (as per 2005 valuations) was about £35k, of which approximately half was in respect of "protected rights" (presumably the serps opt out rebates). These are old policies which were paid into 5-15 years ago - nothing has been paid in during the last 5 years as I'm no longer interested in pensions as I've made other arrangements for retirement.
By my reckoning, I have about £15k - £20k of funds that I can transfer to use in a SIPP (excluding the protected rights elements as I assume they are restricted in some way).
I have the option of buying a long leasehold (999 years) of my office which is part of a residential block (downstairs shop) for £30k which I would dearly like to do.
My question is, can I transfer the £15k - £20k out of my pensions, put in into a SIPP and then either borrow the balance (40-50%) on a loan to the SIPP from a bank, or borrow personally the balance from a bank and pay it into my SIPP as a pension contribution (presumably after April, there are no earnings limits to do this).
I appreciate there will be costs, but my immediate need is to buy the property to secure my future there. I understand that maybe a lot of the rent I will continue to pay to the SIPP may well be taken up in SIPP providers fees. I really would like to put my pension money to use rather than have it sat in funds. I don't plan to need a pension from it when I retire anyway as I have other plans on retirement funding.
Any ideas as to whether my idea is even feasible at all, and if so, any recommended SIPP providers?
I currently have three pensions (2 with Scot Eq by previous employers) and one with Norwich Union (a stakeholder). The total current fund transfer value (as per 2005 valuations) was about £35k, of which approximately half was in respect of "protected rights" (presumably the serps opt out rebates). These are old policies which were paid into 5-15 years ago - nothing has been paid in during the last 5 years as I'm no longer interested in pensions as I've made other arrangements for retirement.
By my reckoning, I have about £15k - £20k of funds that I can transfer to use in a SIPP (excluding the protected rights elements as I assume they are restricted in some way).
I have the option of buying a long leasehold (999 years) of my office which is part of a residential block (downstairs shop) for £30k which I would dearly like to do.
My question is, can I transfer the £15k - £20k out of my pensions, put in into a SIPP and then either borrow the balance (40-50%) on a loan to the SIPP from a bank, or borrow personally the balance from a bank and pay it into my SIPP as a pension contribution (presumably after April, there are no earnings limits to do this).
I appreciate there will be costs, but my immediate need is to buy the property to secure my future there. I understand that maybe a lot of the rent I will continue to pay to the SIPP may well be taken up in SIPP providers fees. I really would like to put my pension money to use rather than have it sat in funds. I don't plan to need a pension from it when I retire anyway as I have other plans on retirement funding.
Any ideas as to whether my idea is even feasible at all, and if so, any recommended SIPP providers?
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Comments
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By my reckoning, I have about £15k - £20k of funds that I can transfer to use in a SIPP (excluding the protected rights elements as I assume they are restricted in some way).
Hybrid SIPPs can take protected rights from 6th April 2006. Full SIPPS have to wait until April 2007.
The questions you ask are quite specialist and I am not a commercial specialist IFA. I don't think we have a commercial specialist IFA contributing to the board. I will give what I believe to be the correct answer based on post 6th April rules (bit late to do anything different now)
You would need a full SIPP/SASS and you can't use the protected rights. So, you can only use the ordinary rights plus 50% more than the value of those ordinary can be borrowed. So, if the ordinary rights are 20k, then you can borrow a further 10k bringing you to 30k. If you fall short, you can always top it up by making a contribution into the pension.
What you want to do is not uncommon and can be a very good thing to do. However, you would need to get a commercial specialist IFA involved. If you are a limited company, it wouldnt do any harm getting your accountant involved as well. Especially as the new rules from A day can make pension contributions more tax efficient than taking dividends instead of salary.
As for provider, that is where the commercial IFA would excel. In theory many SIPP providers would consider but it would depend on the property. A 999 year lease certainly helps.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Try asking A J Bell if they think it can be done.
They are a very experienced bespoke Sipp provider and somewhat of a pioneer in the market - their basic product Sippdeal is very popular (I speak as a very satisfied customer of that).Their people are very helpful on how the rules work, I find.
http://www.ajbell.co.uk/about.htmTrying to keep it simple...
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