Placing residential property into a SIPP

Options
Mikexx
Mikexx Posts: 4 Newbie
First Post First Anniversary
in Pensions, annuities & retirement planning
Is this a practical proposition?



The value is likely to be below the stamp duty limit so minimal cost on transfer.

Comments

  • Malthusian
    Malthusian Posts: 10,941 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Options
    No, as residential property isn't allowed in SIPPs.

    (If you want to be pedantic, it's allowed if you pay heavy tax penalties, but in reality I don't think any SIPP provider would allow you to do it.)
  • Mikexx
    Mikexx Posts: 4 Newbie
    First Post First Anniversary
    Options
    Many thank for the quick reply.

    Is this still the case where the property is held in a Ltd company?

    What are these 'heavy tax penalties'?
  • HappyHarry
    HappyHarry Posts: 1,588 Forumite
    First Anniversary Name Dropper First Post
    Options
    Mikexx wrote: »
    Many thank for the quick reply.

    Is this still the case where the property is held in a Ltd company?

    What are these 'heavy tax penalties'?

    If the property is held in a Ltd company, then it wont be held in a pension.

    'Heavy tax penalties' are between 70% and 95% of the property value.
    https://www.gov.uk/guidance/pension-schemes-and-unauthorised-payments
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Aegis
    Aegis Posts: 5,688 Forumite
    Name Dropper First Post First Anniversary
    Options
    Mikexx wrote: »
    Many thank for the quick reply.

    Is this still the case where the property is held in a Ltd company?

    What are these 'heavy tax penalties'?
    Unless it's a limited company traded on a major exchange, you'd be very lucky to even get company shares into a pension any more. Most providers just won't go near it, and those that will (at least a couple of years ago when I was last asked about this) charge very significant sums for the privilege.

    The penalties in question are the unauthorised payment charges:

    https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm121000#IDAESOQB

    In summary, 40% charge on the balance of the investment, plus a further 25% scheme sanction charge and potentially a further still 15% surcharge.

    In short, you wouldn't want to risk it!
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • Malthusian
    Malthusian Posts: 10,941 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Options
    Mikexx wrote: »
    Many thank for the quick reply.

    Is this still the case where the property is held in a Ltd company?

    AIUI, if the property is held in a limited company you pay corporation tax on net rental income and capital gains, then there's the 15% stamp duty if the property is worth more than £500,000. So before we get to the issue of whether any provider will accept shares in the limited company, why's the property in the limited company?
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards