UK commercial property now appears on the standard assets list for Sipps, the Financial Conduct Authority (FCA) has announced in a policy statement.
A Sipp (Self-Invested Personal Pension) is a type of pension scheme where the party has full control over where their money is invested. Individuals must choose potential investments from a comprehensive list approved by the HMRC.
UK commercial property now joins bank account deposits, National Savings & Investment products, physical gold bullion and units in regulated collective investment schemes on the approved list.
The FCA had previously stated that UK commercial property would remain a non-standard asset, so this recent announcement represents a major change.
Investors choosing a Sipp will have the option to switch investments as and when they please, also being able to have a hand in the decision to buy, lease or sell assets.
Other notable assets that are permitted and are not taxed include stocks and shares quoted on a recognised UK or overseas stock exchange, insurance company funds, government securities and traded endowment policies.
As with all pension schemes, the Sipp is subject to certain limits. For the year 2014/15 the maximum tax-relievable contribution level for a Sipp is £40,000. Contributions above this amount can be made but will be taxed at 40 per cent.
At any time after the age of 55, individuals can start to use the money invested in their Sipp to provide benefits, either in the form of a tax-free lump sum of 25 per cent with the remaining as an income, or just as an income alone.
Due to the level of complexity involved, the Sipp is not for everyone, but those with either previous experience in investing, or with larger funds may benefit from the flexibility it offers.