The government’s decision to widen investment opportunities within self invested pensions so as to incorporate residential property is ‘surprising’ according to Dentons.

In this year’s Budget George Osborne announced that the government is proposing to explore whether conversion of unused commercial properties to residential could be financed through the use of self invested pensions.

Dentons director of technical services Martin Tilley said: “To date, the residential property asset class has not been available to the vast majority of SIPP owners. Currently, residential property can be held in SIPPs only in very limited circumstances such as where an employee must occupy a residential property attached to a commercial one as a condition of their employment or where residential is held as an asset of a genuine diverse collective vehicle.”

Tilley stated that the inclusion of residential property into SIPPs has been proposed before but the idea was axed through fears “that it might facilitate abuse by those able to fund their pensions with the corresponding tax relief and purchase their own residence” which he argued “may have permitted tax advantaged member occupancy, an unauthorised benefit from pension scheme funds”.

He concluded: “It is surprising that the government is looking to widen the investment opportunities with self invested pensions at the same time that the FSA is looking to ensure inappropriate assets are not accepted into the pensions regime.”

Share Story: