What you can put into a SIPPS pension
Direct property investment
One of the most popular investments, especially for the growing army of small business owners who have set up a SIPP, is direct investing in commercial property. Specifically their own business premises.
The rules allow for a person to borrow up to 50% of the value of their pension pot to fund the purchases of a commercial property.
So a fund of £100,000 could be used to buy a property worth £150,000.
There are a couple of important things to remember when investing your pension in you own business premises / property
Firstly the company must pay a fair market rent into the pension fund for use of the building.
… and secondly it is never a good thing to put all your eggs in one basket.
Think very carefully before putting all of your pension into one single asset , no matter how much it would help your business.
Pension experts also warn against trying to be too clever with commercial property in a pension.
Several tell tales of woe, when clients have insisted against advice on putting in an old paint works, or petrol station, into their fund, hoping to benefit from the site’s redevelopment, only to get thumped with a bill for an environmental clean-up, when it later transpires the site is contaminated.
Finally, don’t forget to check what a SIPP provider will charge.
Providers who offer discretionary management of your SIPP (that’s where they chose investments for you) and those that offer property will invariably charge an annual fee – usually a percentage of the pension’s value.