A: The maximum amount that any scheme or plan can borrow is 50% of the current value, less any outstanding loans. 100% of the assets plus any borrowings can be used to purchase an asset, for example the scheme or plan can purchase an asset worth 150% of the current value of the scheme or plan.
A: No, it could be used to buy other assets e.g. stocks and shares or to make a loan back to the principal employer (occupational pension schemes only).
A: A SSAS can lend to a sponsoring employer or to a third party. A SIPP can only lend to a third party. Loans to members or those connected to a member are not allowed. The loan must not be granted for more than 5 years, but under certain circumstances the loan can be extended by up to 5 years.
A: No, with limited exceptions this will be a prohibited investment and if residential property is purchased the scheme may become de-registered which would result in a tax charge equal to 40% of the value of the scheme assets. On top of this there will be additional tax charges.
A: Commercial rent will need to be paid. If somebody uses the property for personal use and commercial rent is not paid then HMRC will impose a tax charge on the member.
A: Yes. Up to 5% of the fund value of the assets can be held in shares of the sponsoring employer or an associated company, if the scheme is an occupational pension scheme. SIPPs can't be used in this way as there is no sponsoring employer.
A: Up to 5% of the market value of the assets of the pension scheme can be held in shares of the employer or an associated company. There is no limit on the amount of shares that can be held in other companies. Where there is more than one sponsoring employer up to 20% of the market value of the assets of the pension scheme can be held in shares of these companies, subject to shares in any one of these employers not being more than 5%.
A: The meaning of a connected:
A person is connected with an individual if that person is:
A person in his capacity as trustee of a settlement is connected with:
A company is connected with another company if:
A company is connected with another person if that person has control of it, or if that person and persons connected with him together have control of it.
Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another, and with any person acting on the directions of any of them to secure or exercise control of the company.
Meaning of ‘company’
‘Company’ includes any corporate body or unincorporated association, but does not include a partnership, and this section shall apply in relation to any unit trust scheme as if the scheme were a company and as if the rights of the unit holders were shares in the company.
Meaning of ‘relative’
‘Relative’ means brother, sister, ancestor (parent, grandparent, great-grandparent and so on) or lineal descendant (child, grandchild, great-grandchild and so on).
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.