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10 of the strangest assets held in Sipps
Sipps, personal pensions which allow you to choose your own investments, are renowned for their flexibility. Read on to see just how far this brief has been exploited by some ingenious financial thinking.
by William Robins on Mar 10, 2011 at 00:01
All sorts of commercial properties find their way into Sipps. However, one issue to be wary of is the potential for environmental contamination. If local environmental enforcement tells the Sipp company to clean up after one of its assets, it is bound by the ruling, even if the cost of that far exceeds the value of the asset.
Walsall FC stadium
The home of the Saddlers, named after Walsall’s reputation as a saddle manufacturer, sits in a Sipp. Hopefully the capital value of this commercial property has not been too badly damaged by the team’s recent defeat to Colchester.
Placing a hotel room in a Sipp is a relatively common practice. The hotel gives the rooms to the Sipp on a long-term lease as a means of generating some upfront revenue. The hotel also receives a proportion of the income from the room as a fee for finding guests.
Ironically, housing residents at Her Majesty’s pleasure does not break HMRC’s Sipp rules on residential property. Along with university halls of residence, prisons are exempt from residency rules. It is in theory possible to buy a prison, put it in a Sipp and then rent it back to the government.
Car park space
Car parking spaces have value if they are in particularly desirable locations, especially where there is an absence of ample free parking. An empty space in central London is held in a Sipp, paying rent to its previous owner who is now, we assume, using the bus.
Had David Cameron not pulled plans to sell off Forestry Commission-owned woodland to private hands there would have been more of this in Sipps. Benefits come from increased capital value of the land and potential development of the site. However, Sipp purchasers must abide by any restrictions on use of the land.
When someone sells a chunk of land they often keep a strip for themselves, for example across a spot where they think developers will want to build an access road. They can then sell it later at a premium, but in the meantime, hold it in their Sipp.
Interest in turbines is rising as entrepreneurs spot the opportunity to make their millions from wind power. Through a Sipp, investors can buy land and build their wind farm. However, the Sipp must use another company to sell the electricity to the grid. A Sipp must not sell directly, as Sipp companies are not allowed to engage in trading.
You can’t put an animal into a Sipp, but you can fit a zoo into one. The owners of a Kent-based zoo have placed it into a Suffolk Life wrapper.
Not every asset held in a pension is a pleasant one: a public toilet building has even been placed in a Sipp. However, since being placed in the wrapper, it has been converted into office space. We hope it was given a good clean.