+44 (0) 20 3301 1300 info@hearthstone.co.uk

HMRC Rules

Whilst a SIPP member could theoretically buy a house or flat within their scheme, HMRC define this type of asset as 'taxable property' and introduced a range of tax penalties which make this unviable.
Direct holding of residential property within a SIPP would usually result in punitive tax charges of up to 70% of the value of the property purchased:
 
  • 40% unauthorised member payments charge
  • 15% unauthorised payment surcharge payable by the member (where the amount of the unauthorised payment is greater than 25% of the fund)
  • 15% scheme sanction charge (reduced from 40% where the member has had to pay 40% on the unauthorised member payments charge) 
     
    However, these tax charges do not apply if the SIPP invests in a 'genuinely diverse commercial vehicle' which in turn holds residential property. These vehicles fall into three categories:
    • UK REITs
    • Other kinds of vehicle
    • Trading Concerns
 Full details on the rules regarding this can be found via http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM07109440.htm



The TM Hearthstone fund falls under the 'Other kinds of vehicle' category, and satisfies the following conditions:
 
  • Each pension scheme must hold 10% or less of the fund
  • The value of the fund must be greater than £1m or hold at least three residential properties directly
  • No single asset which is taxable property (residential property) exceeds 40% of the total assets
  • The fund is not a closed company
  • There is no right for the SIPP member to gain private use of any of the properties
 
Thus, SIPP members may invest in residential property via the Hearthstone fund without triggering tax penalties.

Register for updates

If you would like to receive updates regarding Hearthstone Investments, or to receive our newsletter, please provide your details and particular area of interest below.

Terms and conditions

Hearthstone Disclaimer

Please agree to the terms below to view content in the 'Intermediaries' section.

Hearthstone Investments PLC is the parent company of the Hearthstone Group. Regulated activities associated with the TM Hearthstone ICVC are carried out by Hearthstone Asset Management Limited, which is an authorised representative of Thesis Asset Management Limited, authorised and regulated by the Financial Conduct Authority (114354). Other companies in the group provide investment advisory and other services funds aimed at professional clients. Details of these companies are provided in the investment materials associated with each fund.

Information in this section of our website is intended for professional clients and investment professionals and should not be relied upon by retail investors. No information in this website should be treated as an invitation or inducement to invest in any investment product nor as investment advice. If you are a professional client or investment professional you should not provide retail clients with access to information from our website that is not specifically designed by us for their use. Neither Hearthstone Asset Management Limited or Thesis Asset Management Limited accept any responsibility for your use of this site other than in accordance with these terms.


You will not be prompted for up to 30 days for content in this section. You will be prompted again if you use a different computer or delete your internet browser cookies.