SIPP as Tax Efficient method of holding Land with development prospects?

Shylock

I own a small piece of Green Belt land I'm thinking of "buying" into a SIPP in the hope that one day it's value may increase. I understand that land held in a SIPP has to be a commercial proposition, but what counts as a commercial undertaking?  For instance, I currently use the land for caravan & boat storage etc..  If my SIPP were to charge me Rent at the going rate for that facility would that satisfy the requirement? If the land eventually achieved Planning Consent for residential development my understanding is that my SIPP would need to sell it before construction started to avoid CGT. Is that correct?

Another_Saver

This sounds dodgy, and you're land banking during a housing crisis, please don't. If this land has no commercial application currently then I don't see you being able to get it into a SIPP.

Brynsam

Shylock said:

I own a small piece of Green Belt land I'm thinking of "buying" into a SIPP in the hope that one day it's value may increase. I understand that land held in a SIPP has to be a commercial proposition, but what counts as a commercial undertaking?  For instance, I currently use the land for caravan & boat storage etc..  If my SIPP were to charge me Rent at the going rate for that facility would that satisfy the requirement? If the land eventually achieved Planning Consent for residential development my understanding is that my SIPP would need to sell it before construction started to avoid CGT. Is that correct?

Unlikely you could find a SIPP provider who would agree that it is a genuine commercial venture, particularly if this piece of land is handily located next to where you live. As you've already got a SIPP, no harm in asking them what they think, provided it meets the normal requirements such as access to a public highway, a formal lease being put in place with rent at market value etc.

Shylock

Another_Saver said:

This sounds dodgy, and you're land banking during a housing crisis, please don't. If this land has no commercial application currently then I don't see you being able to get it into a SIPP.

With the utmost respect, I don't think I am!  A small parcel of land that has been in my family for many years which has a remote prospect of one day achieving planning consent is hardly "land banking"!  And by investing my time, effort and money in attempting to achieve planning consent I'd suggest I'm actually DOING something about a housing crisis rather than wringing my hands over it!

michaels

If you achieve planning permission I would assume the land will become worth a lot more, possibly hundreds of thousands.  Perhaps it might be fair to share a proportion of that to support public services such as the NHS, you will still pocket more than 70% of the gain which sounds like a lot to me.

squirrelpie

michaels said:

If you achieve planning permission I would assume the land will become worth a lot more, possibly hundreds of thousands.  Perhaps it might be fare to share a proportion of that to support public services such as the NHS, you will still pocket more than 70% of the gain which sounds like a lot to me.

There's definitely an argument for reviewing and perhaps changing how planning gain is shared between the owner and the public, either generally or perhaps preferentially involving neighbours for some definition of neighbour. But I suggest that discussion is better kept for another forum than one on the issues surrounding pensions.

Shylock

michaels said:

If you achieve planning permission I would assume the land will become worth a lot more, possibly hundreds of thousands.  Perhaps it might be fare to share a proportion of that to support public services such as the NHS, you will still pocket more than 70% of the gain which sounds like a lot to me.

I wasn't really looking for opinions on ethics or morals.  But thanks anyway.

Dox

Brynsam said:

Shylock said:

I own a small piece of Green Belt land I'm thinking of "buying" into a SIPP in the hope that one day it's value may increase. I understand that land held in a SIPP has to be a commercial proposition, but what counts as a commercial undertaking?  For instance, I currently use the land for caravan & boat storage etc..  If my SIPP were to charge me Rent at the going rate for that facility would that satisfy the requirement? If the land eventually achieved Planning Consent for residential development my understanding is that my SIPP would need to sell it before construction started to avoid CGT. Is that correct?

Unlikely you could find a SIPP provider who would agree that it is a genuine commercial venture, particularly if this piece of land is handily located next to where you live. As you've already got a SIPP, no harm in asking them what they think, provided it meets the normal requirements such as access to a public highway, a formal lease being put in place with rent at market value etc.

Even if your current SIPP provider says no, it is worth googling to see which SIPP providers specialise in offering SIPPs which hold land, and asking them whether they would accept your proposal. You do need to make it sound more formal and structured when you present it - precise area of land, where exactly it is located and how accessible it is including public access, what exactly you intend to use it for and the proposed market value rent/details of the lease you would establish. Anything which helps to make it look 'businesslike' will increase your chances of acceptance.

Shylock

Dox said:

Brynsam said:

Shylock said:

I own a small piece of Green Belt land I'm thinking of "buying" into a SIPP in the hope that one day it's value may increase. I understand that land held in a SIPP has to be a commercial proposition, but what counts as a commercial undertaking?  For instance, I currently use the land for caravan & boat storage etc..  If my SIPP were to charge me Rent at the going rate for that facility would that satisfy the requirement? If the land eventually achieved Planning Consent for residential development my understanding is that my SIPP would need to sell it before construction started to avoid CGT. Is that correct?

Unlikely you could find a SIPP provider who would agree that it is a genuine commercial venture, particularly if this piece of land is handily located next to where you live. As you've already got a SIPP, no harm in asking them what they think, provided it meets the normal requirements such as access to a public highway, a formal lease being put in place with rent at market value etc.

Even if your current SIPP provider says no, it is worth googling to see which SIPP providers specialise in offering SIPPs which hold land, and asking them whether they would accept your proposal. You do need to make it sound more formal and structured when you present it - precise area of land, where exactly it is located and how accessible it is including public access, what exactly you intend to use it for and the proposed market value rent/details of the lease you would establish. Anything which helps to make it look 'businesslike' will increase your chances of acceptance.

Thanks. All good points which I'll take onboard.