Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he has made an assessment of the adequacy of the restriction preventing the holding of commercial and residential properties within Self Invested Personal Pensions.

While the current tax rules impose no direct restrictions on the types of assets that Self Invested Personal Pensions (SIPPs) can invest in, SIPPs will incur tax charges if they acquire certain assets, such as residential property. This is to prevent individuals from using tax-relieved funds to acquire property that could be of personal use, rather than to secure future retirement income.

However, SIPPs are able to indirectly invest in residential property through collective investment vehicles such as Real Estate Investment Trust (REITs), where sufficient diversity of ownership and assets prevents the possibility of private use of the assets.

The legislation aims to strike a balance between allowing these pension schemes to invest in a wide range of assets, and the need to protect both tax relief on pension contributions and investment returns from potential abuse.