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Unregulated investments and the term ‘SIPP approved’

In response to what happened with Harlequin Property, Taylor Patterson has been questioned on what the term ‘SIPP Approved’ actually means, and whether there is an industry acknowledgement of WHAT is approved, and more importantly, WHAT is not.

With only certain investments being allowed in a SIPP due to the advantageous tax position, SIPP providers can inform you on which forms of investments are permitted. Whether an investment is acceptable is the decision of each specific provider’s interpretation on HMRC’s rules.

One thing to make clear, just because a provider allows a specific investment to be held in a SIPP, it doesn’t necessarily mean a significant amount, or indeed any, due diligence has been done.

Across unregulated investments the term ‘SIPP Approved’ is regularly used. Taylor Patterson recognises that the following are often linked with unregulated investments.

  • Certain crops
  • International Farmland
  • Renewable energy
  • Bio Fuels
  • Storage facilities
  • Hotels in the UK and overseas
  • International luxury holiday complexes 
  •  

As can be seen from the list of unregulated investments, which are positioned under the banner of ‘SIPP Approved’ – they are still unregulated investments. There is no exhaustive allowable investments list from HMRC or the FCA (Financial Conduct Authority). The terminology ‘SIPP approved’ is used to try and reassure investors that it is appropriate for a SIPP.

The banner of ‘SIPP Approved’ therefore holds no credential on whether the investment is appropriate to be held in a SIPP – it is quite simply a marketing term used by firms to try and endorse their investment decision making.

Taylor Patterson wouldn’t use this marketing term, and quite simply look at each investment on its own and judge whether we consider it applicable to pass the HMRC rules. We do this by performing due diligence on whether an investment fits the HMRC rules, we also seek the expertise from our external advisers if required and can utilise online due diligence tools.  

Unregulated investments are, by their nature higher risk and the FCA are certainly keeping a closer eye on them and how they are marketed.

For further information please contact Kerry Houghton, SIPP/SSAS Business Development Manager on 01772 550614 or email kerry.houghton@taypat.co.uk.

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