Contributions to SIPP must be in the form of a monetary amount.
However, the rules allow for a member to agree a monetary contribution to be paid to the SIPP and to settle this debt by way of a transfer of assets. The asset could be in the form of a non residential property.
Where a property is already owned by the member, the property can be used to satisfy a personal contribution to the SIPP. The usual rules in respect of contributions and the annual limits will apply.
The ‘in specie’ property contribution will be a net payment into the SIPP with basic rate tax relief claimed by GPC SIPP Ltd in the normal way. Any higher rate tax relief would be claimed by the member through their self assessment return.
Where the property is owned by the employer, an employer ‘in specie’ property contribution can be made to an employee’s SIPP. The employer’s contribution is a gross contribution to the SIPP with the contribution being considered as a business expense in the normal way.
A property being used as an ‘in specie’ contribution which has gained in value from the time of purchase, would have to satisfy the normal rules for Capital Gains Tax applicable at the time the contribution is being made. Any CGT at the time of transfer to the SIPP would require to be settled outside the SIPP.
A member or employer wishing to pay a contribution in this manner must specify, in writing, the monetary amount they wish to make to the SIPP.
The process for a property to be considered as an ‘in specie’ contribution is similar to that of property purchase.