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What types of property can a SIPP or SSAS Pension invest in?

Buildings in the isometric

Pensions are highly tax efficient and you can purchase Commercial Property, the main examples of types of property your pension could buy are

  • Industrial units
  • Offices and shops
  • Farmland and forestry
  • Public houses
  • Nursing homes
  • Hotels
  • Marine berth

The things you can’t buy are residential property, holiday property, caravans, beach huts, basically, if you can live in it then it will probably be difficult to put it your pension.

Buying a commercial property can be a great investment opportunity, I have been investing in property since 2002 as part of a small pension syndicate of friends and family we are currently invested in an Office Block and 6 Retail Units, we also bought some properties into separate companies and did originally have HMO’s too.

The yield on commercial property is often around 8% to 10% and you can borrow into your pension to help fund the purchase.

Your business can rent a commercial property from you and many owner managed businesses have transferred company owned premises to a SIPP or SSAS.

There have been some very interesting deals done for example

From a music studio in Costa Rica to a yacht berth in the south of France, Sipp (self-invested personal pension) providers report an ever-growing list of exotic assets being bought with pension money to fund investors’ dream business ventures.

Yacht de luxe.

For aviation-mad Tony Fowler, a property developer from West Sussex, the acquisition of a 50pc stake in the Isle of Wight airport through his Sipp means he can fulfil his passion for flight while at the same time investing for his retirement.

Plane and Airport Flat Design Illustration Icons Objects

“A friend and I have paid half each of the total purchase cost of £635,000,” he said. “I was delighted when I found I could use money in my pension to buy the airport. It had been taken over by the receivers and was going to be closed down, but now it is being renovated and improved. We like to think it will bring something to the local economy as well.”

There have been some further restrictions added so its worth checking the rules before choosing an unusual property

I know that Martin Tilley, Director of Technical Services at Dentons is happy to clarify and help

M 07833 084 639

Introducing BrightPay Payroll & Auto Enrolment – Online Training for Accountants

Auto enrolment is well on its way and it’s definitely here to stay. The vast majority of employers want help with the auto enrolment setup and ongoing duties. Here at BrightPay we have worked hard to automate and simplify the AE process for payroll bureaus. By streamlining AE with payroll technology you will make your life easy.

BrightPay is a powerful payroll and auto enrolment software that makes managing payroll easy. For bureaus, BrightPay is an easy to use solution with no limitations on the number of employees or employers that can be processed.

BrightPay automates automatic enrolment for you including employee assessment, batch enrolment, personalised tailored communications, postponement, opt-ins, opt-outs & refunds, ongoing monitoring, required reporting and calculations for AE pension providers and much more.

Brightpay webinar

This training webinar will take you through the payroll process from setting up an employer to submitting your RTI submissions. Discover how easy it is to process auto enrolment for your payroll clients. You will learn how BrightPay can automate the AE duties and save you time in the process. Find out why BrightPay has a 99.3% customer satisfaction rate with 99.5% of customers describing our interface as user friendly.

NEST web services / API
This week, BrightPay will release the new NEST web services or API tool to their customers. This tool will be of significant use for accountants that process payroll for a number of clients. The NEST web services allows users to submit their data file from within the BrightPay interface directly to NEST. This process will be demonstrated on the training webinar.

Webinar Date: 8th December | 2.00 pm

Register here

Introducing BrightPay Payroll & Auto Enrolment – Online Training for Accountants

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Can my Pension buy shares in my company?

Successful Businessman With A Contract In Hand

A pension scheme can buy quoted or unquoted shares in a company based either in the UK or overseas.

An occupational pension scheme can buy shares in one or more of the employers participating in the scheme as long as both the following conditions are met:

  • the total value of the scheme funds invested is less then 20% of the net value of the pension scheme funds
  • the amount invested by the scheme in the shares of any one employer participating in the scheme is less than 5% of net value of the pension scheme funds

Any investment larger than this will be an unauthorised payment and both the scheme employer and scheme administrator will have to pay a tax charge on the amount above the limit.

So in theory, yes, it is possible, but in reality its likely to fail because:

  1. An independent ‘Arms Length’ valuation will be required, for an unquoted small business or start up this is extremely difficult as establishing a market value for the shares will be difficult and often a start up will have losses in the first few years
  2. The HMRC’s rules which govern all registered pension schemes (in particular the sections covering both taxable property and tangible moveable property) dictate that the combined shareholding in the unquoted company held between the pension fund, the member personally and any other connected persons must never exceed 19%, otherwise there would be enormous tax consequences for all concerned
  3. The company concerned must not (and never should be in the future) controlled by the trustees of the pension fund in conjunction with connected parties

If the business needs the money to buy commercial premises for its trade it would be easier for the pension scheme (SSAS) to lend the money, a SSAS can lend up to 50% of net scheme assets as explained in in this fact sheet from Curtis Banks

If you are over 55, you could also consider drawing down funds from your pension, the first 25% will be tax free.

BrightPay: Now Supporting 14 Pension Providers

The introduction of automatic enrolment means that employers across the UK must enrol eligible jobholders into a workplace pension scheme.

Employers must choose a pension scheme that meets the qualifying criteria for auto enrolment. The Pensions Regulator recommends that you choose your pension provider 6 months before your staging date to allow enough time to make the right choice for you and your staff.

There are a number of things to consider when choosing a pension provider, one of the most important being compatibility with your payroll software. Each pension provider requires information in various formats and so it is essential that your payroll software supports your chosen pension provider.

Speak to your payroll provider and ask them if your chosen pension scheme will work with your software. If it doesn’t, you should consider updating your software.

BrightPay currently supports 14 different pension providers, with more constantly being added. If your chosen pension provider is not on the list below, feel free to let us know and we can look into making it available.

BrightPay Pensions

The pension provider support in BrightPay allows you to create customised enrolment and contribution files for each of the pension providers, where applicable. APIs with a number of the above pension providers are also in working progress. This means that there will be a direct link between BrightPay and the pension scheme provider.

Although BrightPay supports these pension providers, the software does not choose the pension scheme provider for you. It is the employer’s responsibility to choose a relevant pension provider for their workforce.
To assist with choosing a pension scheme, The Pensions Regulator has recently released a guide to selecting a pension scheme for automatic enrolment for employers. If you need extra guidance, you can also contact an Independent Financial Adviser, but ultimately, the choice of scheme is the responsibility of the employer.

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Written by Rachel Hynes for BrightPay Payroll and Auto Enrolment Software

Payroll Bureaus – Does Auto Enrolment Apply to your Director Clients?

Auto Enrolment is about to hit its peak with over 500,000 small and micro employer set to stage in 2016. With this high volume of micro employers staging early next year, it is important to know whether or not Auto Enrolment applies to your clients.

If your client has at least one member of staff who is paid via a PAYE scheme, Auto Enrolment duties will apply. The only exeption when Auto Enrolment duties does not apply is when a company or individual are not considered to be an employer.

You won’t have any duties if you meet one of the following criteria:
● you’re a sole director company, with no other staff
● your company has a number of directors, none of whom has an employment contract
● your company has a number of directors, only one of whom has an employment contract
● your company has ceased trading
● your company has gone into liquidation
● your company has been dissolved

Automatic enrolment will apply if more than one director has a contract of employment, be it a written or verbal contract. You can find out more about Automatic Enrolment for Directors here.

What if Auto Enrolment does not apply to my clients?

If your client receives a letter which includes their staging date and you believe that auto enrolment does not apply to them, you or the employer need to notify the Pensions Regulator.

To inform the Pensions Regulator, you must fill out an online form with your client’s PAYE Reference and Letter code. Notify the Pensions Regulator here.

Once you have notified the Pensions Regulator, you will receive a confirmation email and your client will no longer receive any further communications.

Change in Circumstances
Your client’s circumstance will change if a new member of staff is taken on other than a director, or if at least two directors started working for them under contracts of employment.

If this occurs, auto enrolment will now apply to your client and the employer, or you on their behalf, must notify the Pensions Regulator of the change.

However, if you do have auto enrolment duties to perform it will make it easier if you have suitable payroll software in place to automate the AE duties. BrightPay is a payroll solution that is free to employers with up to three employees or the bureau licence has unlimited employees and employers. Why not try our free 60 day trial to find out for yourself ?


Written by Rachel Hynes for BrightPay Payroll and Auto Enrolment Software

Have you been over taxed on your pension withdrawal?

This is exactly how I pictured the partners lounge

You should be able to withdraw 25% of your pension tax free, but your pension provider will tax you on payments above this level.

If they don’t hold a current P45, the pension provider will apply an emergency tax code on a month 1/week 1 basis, which could mean you pay too much tax.

You will need these forms to reclaim the tax

Form P50Z – if the client has chosen to empty all their pension pot in one go and they have no other PAYE or pension income (other than the state pension);

Form P53Z – if the client has chosen to empty all their pension pot in one go and they do have other PAYE or pension income other than the state pension;

Form P55 – where the client has taken a lump sum payment which doesn’t use up all of their pension pot, they have only taken a single payment and don’t intend to take further payments in that tax year.

Will you be taxed if you inherit a Pension Fund?

Signing Last Will and Testament

IHT only applies if the pension company has to pay the value of your scheme to your estate, in which case it becomes like any other asset, but generally the pension pot is held in a discretionary trust, which means it isn’t taxed on death.

You can now nominate anyone not just dependents to be the beneficiary.

Since 6th April 2015 anyone who inherits a pension fund from a person who dies before the age of 75 is entitled to receive it tax free and the you can take the money as a lump sum or income. Once over 75 a special tax of 45% applies (previously 55%), you could reduce this by taking a regular income.

From 6th April 2016 the 45% tax is likely to be scrapped and income tax rates will be applied.

The BBC website has a useful post which explains the changes in 10 questions, click here to read it

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