The change in HMRC regulations on 6th April 2006, reduced significantly the amount a SIPP can borrow thus restricting the amount of finance individuals can raise through a pension scheme to purchase property. Previously, a SIPP could borrow up to 75% of the purchase price of a property and a further sum for VAT if payable. This meant that a member with £60,000 in a SIPP could borrow £180,000 and purchase a property inclusive of costs but excluding VAT of £240,000. Now a SIPP can only borrow 50% of the value of the SIPP and thus the same member would only be able to borrow £30,000 and would have just £90,000 to invest in property including VAT! For this reason many businessmen, particularly professional practitioners, are looking at ways of pooling their pension resources to buy property.

Taylor Patterson has had its pension lawyers design a group sipp to meet this need. The Group SIPP was launched in September 2007

Unlike most other so-called group sipps, the Taylor Patterson Group SIPP is an individually registered pension scheme, it is the personal pension plan equivalent of a Small Self-Administered Scheme and therefore is particularly suited to partners in professional practice and other businessmen wishing to purchase property and lease it back to their business or to a third party as an investment.

The Group SIPP has all the tax benefits and other attractions of The Individual SIPP. However, members can pool resources by transferring their benefits in existing pension arrangements and making contributions into a single arrangement that is segregated from other SIPPs.

PROPERTY INVESTMENT

The Group SIPP can borrow up to 50% of the pooled resources under a single bank loan making property purchase more viable. Ownership of the property and the mortgage is shared between the members' accounts in the ratio of each individual's contribution to the purchase price and related costs.

As the Group SIPP is a single arrangement, the legal and other costs of purchasing a property and raising a mortgage are significantly lower compared to a number of linked individual SIPPs buying a property under a "tenancy in common" with individual mortgages. Also, the ongoing administration costs will be less. Furthermore, it is simpler and less costly to "re-allocate" the shares in the property should one member wish to dispose of all or part of his share to other members.

A principal feature is that the Taylor Patterson Group SIPP can invest in all types of property in the UK apart from residential property. The SIPP can invest in:

To avoid the tax charges imposed by HMRC's Taxable Property Rules, the SIPP cannot invest in any property that is "suitable for use as a dwelling". This generally means residential property and includes holiday lets, "time shares" and similar arrangements. In certain specific and limited circumstances residential property can be held.

Although the principal attraction of the Group SIPP is the facility to pool resources for property purchase, members can also invest other funds on their own account.

Click here for our Guidance Notes on Property .

GENERAL INVESTMENT

For those who wish to pool resources with others to gain the advantage of "size" when investing in stocks and shares, managed funds, unit trusts and other collectives, The Group SIPP is an ideal investment wrapper. Members can manage the SIPP portfolio themselves or appoint an investment manager.