Unlisted shares in a SIPP

MBM

Does anyone know a SIPP compmay that will allow investments into an unlisted company?

PaulCooper

You are not allowed by the government to purchase or keep unlisted shares in a SIPP, nothing to do with the provider
Paul

thenudeone

PaulCooper wrote: »

You are not allowed by the government to purchase or keep unlisted shares in a SIPP, nothing to do with the provider
Paul

That is definitely NOT TRUE.

I have unlisted shares in my SIPP with Curtis Banks.

Some possible providers are listed in post 20 on this thread:
https://forums.moneysavingexpert.com/discussion/2885170
The rest of the thread is also worth reading as it covers some limitations and drawbacks.

Annisele

I believe there used to be restrictions on holding unlisted shares within a SIPP, but A day got rid of them.

I couldn't find a link from HMRC to confirm that; the best I can come up with is this from Barclays (which doesn't allow unlisted shares).

You might want to run your idea past an IFA - just because some providers are in principle prepared to allow an investment in unlisted shares, doesn't mean that any (or all) of them would be prepared to allow the specific investment you have in mind.

Loughton_Monkey

http://www.hmrc.gov.uk/pensionschemes/ir76.pdf

a24.1 PERMITTED INVESTMENTS FOR SIPPS
• Stocks and shares listed or dealt in on any Inland Revenue recognised stock exchange (including the AIM), including:.............

a25.1

[FONT=AGPNHO+Arial,Bold,Arial][FONT=AGPNHO+Arial,Bold,Arial]PROHIBITED INVESTMENTS FOR SIPPS INCLUDE [/FONT][/FONT]

• Premium bonds
• Loans to any party
• Milk quotas
• Fishing quotas
• • Residential property (except as an element of commercial property as specified in
• 11.17 of Part 11)
• Gold bullion
• Shares traded on OFEX
• Unlisted shares (except in a site maintenance company, for the necessary extent needed to purchase a commercial property (see 11.15) and those received as contributions in accordance with paragraph 4.32).
• Personal chattels (e.g. paintings, antiques, fine wine and jewellery)

• Borrowing other than that specified in 11.25,11.28 or 11.29 of Part 11

Note that the government does not trust its own Premium Bonds in a SIPP.

Annisele

Loughton Monkey, I think the information in that link is fairly old (it's marked copyright 2000, and it talks about contribution limits up to 5 April 2001 and post 6 April 2001).

I was trying to find a post A-day HMRC link for what is and isn't accepted in a SIPP (as Barclays seems to think the rules changed then), but I couldn't find anything.

property.advert

Annisele wrote: »

Loughton Monkey, I think the information in that link is fairly old (it's marked copyright 2000, and it talks about contribution limits up to 5 April 2001 and post 6 April 2001).

I was trying to find a post A-day HMRC link for what is and isn't accepted in a SIPP (as Barclays seems to think the rules changed then), but I couldn't find anything.

Not HMRC but Jan 2011 http://www.jameshay.co.uk/DocumentView.aspx?DocumentID=21&DocumentRef=JHAY0189

but the FT thinks that HMRC has no desire to maintain such a list http://www.ftadviser.com/InvestmentAdviser/Pensions/Personal/SIPPs/Supplements/article/20101018/a9dc5a0e-cfc4-11df-b2be-00144f2af8e8/Supplement-Sipps--Fine-dining-or-just-a-simple-takeawy.jsp

SippTechie

The information in the link is from the Guidance Notes that applied until 5 April 2006. Now out of date.

Unlisted shares can be held in a SIPP now but some providers do not allow for a variety of reasons.

One of the main reasons is that holding shares of a trading company in a SIPP (and this applies to any shares, not just unlisted shares) can lead to tax charges where an individual and associated parties has control of more than 20% of the company.

Clearly there is more of a risk of this limit being breached where investment is being made in the unlisted "Smith Trading Company" by Mr Smith's SIPP than it is where Mr Smith's SIPP is investing in BT, and because the 20% limit is something that can be difficult to monitor or control, and can place restrictions on the company itself after the purchase has taken place, some SIPP providers just do not allow unlisted shares to be held.

There are other reasons for the restriction, but that is a significant one.

As other posters have mentioned, there are some providers who will allow this. They are typically at the bespoke, rather than low-cost, end of the SIPP market.

thenudeone

Annisele wrote: »

You might want to run your idea past an IFA - just because some providers are in principle prepared to allow an investment in unlisted shares, doesn't mean that any (or all) of them would be prepared to allow the specific investment you have in mind.

I doubt any IFA would put their name to any advice recommending shares in an unlisted company, due to their high risk and illiquid nature, although if you had substantial other pension assets it might be an acceptable recommendation as part of a much wider portfolio.

If you decide to invest in an unlisted company you probably know a lot more about it than an IFA!

richone

Yes you can buy unquoted shares with a SIPP depending on the provider and yes you need to be careful that it is not treated as taxable property in the SIPP and therefore triggers unauthorised payment charges. This could be triggered if you own or control over 20% of the company and the company has taxable property within it.

If this is a problem and it's your own company a SSAS (Small Self Administered Scheme) can use 5% of the pension fund to buy shares in your own company avoiding the 20% problem and can loan upto 50% of the net assets of the scheme back to the company, which is helpful for cash flow as the loan can be as low as 1.5% pa.