VAR for suitability: A quick “decision review” template for complex SIPPs

This article is intended for financial services professionals only. None of the information contained in this article should be received as advice. Pensions are a complicated area of financial planning and IPM suggests that financial advice from a suitably regulated financial adviser is sought before an individual takes any action in respect of their pension savings.

As we are now into summer, the 23rd edition of football’s World Cup is underway in the United States, Canada, and Mexico.

The 2026 World Cup has a record number of nations competing, giving more people the chance to cheer their nation on to potential glory. Fingers crossed for England and Scotland to progress as far as they can in the tournament!

With many people taking an interest in the action across the pond, we wanted this edition of our newsletter to have a World Cup theme.

Granted… this is difficult when you are trying to link one of the biggest sporting events in the world with SIPPs!

So, we are going to send some of the questions and comments we receive relating to SIPPs to IPM’s own VAR and give you our verdict.

For those not familiar with football or VAR, this stands for “video assistant referee”. When a decision is made by the referee in a match (or sometimes not made), the VAR will step in to determine whether the referee may wish to reconsider their position.

Here goes!

1. “You can hold residential property in a SIPP”

It’s well known that commercial property can be held in a SIPP; this is a particular area of strength for IPM. However, we are often asked to consider properties that have a residential aspect or cross into a grey area between commercial and residential. It’s important to get this right, as residential property held in a SIPP can result in tax charges.

IPM’s VAR verdict – HMRC issue guidelines for SIPP operators via the Pensions Tax Manual (PTM) as to how SIPPs should be run. As these are guidelines as opposed to rules, they can be open to interpretation.

On residential property, the PTM states:

“Residential property can be in the UK or elsewhere and is a building or structure that is used or suitable for use as a dwelling.”

It is therefore down to each SIPP provider to interpret the above in regard to what properties they will accept in their scheme. At IPM, we will not accept the following:

Holiday lets
Airbnbs
Student accommodation
Some B&Bs

With that said, the PTM does make provision for “permitted job related” residential property to be held in SIPPs without a tax charge. This is where the SIPP is purchasing a property which is mainly commercial but has a residential element as it is a “required condition of employment” that someone always lives on site.

IPM will consider these on occasion, but mainly buildings like pubs or care homes would fall into this category.

Some properties may be mixed use, and contain a residential element. While it may be the case that the residential cannot be held, for properties of this nature it is always worth speaking with us to see what options there are.

2. “My client lives outside the UK. That means they cannot set up a new SIPP”

Whether it is clients retiring abroad or technological advances meaning it is now easier for people to work anywhere in the world, it is now not uncommon to spend some time or even reside outside the UK.

We often get asked – “I have a client who lives in <insert country name here>. Does that mean they cannot set up a SIPP?”

IPM’s VAR verdict – There is no requirement that an individual must live in the UK to set up a SIPP to make a transfer of benefits.

However, the Relevant UK Individual Criteria must be satisfied if an individual wishes to pay a contribution into a SIPP and receive tax relief. You can find out more about this on page three of our Key Features document.

We understand some providers will not set up a SIPP if an individual resides overseas. While IPM will assess each case on its own merit, in general we are open to such scenarios on the basis that the client concerned is receiving the appropriate advice.

3. “Fixed-term deposits over one month would be treated as a non-standard investment and therefore cannot be held in a SIPP”

In 2016, the Financial Conduct Authority (FCA) introduced the concept of non-standard investments (NSIs) for SIPPs, with the primary aim of preventing investments that have previously caused significant consumer detriment being made in the future. If a SIPP provider were to allow an NSI, they would have to undertake significant due diligence beforehand and set aside a surplus in their capital adequacy per client who held an NSI.

In general, an investment is deemed to be an NSI where it is not regulated, held outside the UK, or cannot be realised within 30 days.

While these rules were brought in to safeguard consumers from potentially harmful investments, caught in the crossfire were investments such as cash deposits which have fixed terms over a month as well as National Savings & Insurance bonds, which are normally held on a one-, two-, or five-year basis. Seemingly “safe” investments, but the rules technically make them NSIs.

IPM’s VAR verdict – We think it’s a nonsense that fixed term deposits, accounts with notice periods over a month, and National Savings & Insurance bonds are categorised in the same way as some well-known investments which have seen clients lose a large portion of their retirement savings.

Ultimately, each SIPP provider will decide how they will treat such investments, or whether they will hold them at all. IPM has no issue with holding such investments. Clients can do so within the IPM SIPP at no additional cost, and we will absorb any increase in our capital adequacy position because of this.

4. “My client wants to purchase land within a SIPP”

HMRC guidelines allow for land to be bought within pension schemes, and this is something which we are regularly asked to consider.

IPM’s VAR verdict – IPM owns a lot of land within our Scheme.

One of the key things to consider under HMRC guidelines is that any property / land bought within a SIPP must be done for commercial purposes. Therefore, when being asked to consider a land purchase, we want to understand what it will be used for; examples of land IPM have bought in the past include farmland for animal grazing or crop growing, land for storage, or campsites.

In our role as trustee, IPM’s first duty is to act in the best interests of the SIPP at all times. Therefore, some of the points we consider with land purchases include the following:

Is the land accessible from a public highway? We do not want to be in a position where we own a parcel of landlocked land, which unconnected third parties would not be interested in purchasing; this would impact the possible sale proceeds that could be received by the SIPP.
What will the land be used for? As we have seen, any purchase of land must have commercial usage. We would want to understand what that use is, who will be occupying the land, and who the lease will be made out to.
What will the rental yield be? We accept that rental income for land tends to be lower than what we can expect to see on more traditional properties. However, IPM need to ask the question: “Is this the best use of SIPP monies?” We have been asked in the past to spend six figures on a piece of land, only for the rental income not to cover IPM’s annual fee of £580+VAT.
Does the client own residential property nearby? As we considered, HMRC apply tax charges on residential properties held in a SIPP. This extends to land which is used for residential purposes.

5. “My client wants to make this investment – they say it is SIPP approved”

As a bespoke SIPP provider, we are used to being presented with a wide variety of different investments for consideration. Occasionally, we are told that the investment is “SIPP approved” or the firm offering the investment tells us that it can be held in a SIPP.

IPM’s VAR verdict – We always try to keep an open mind when it comes to any investment within our SIPP. There are some definite “nos” from us: unquoted shares, overseas property, and tangible investments, such as fine art or classic cars, to name a few.

If an investment is coming to us with a “SIPP approved” badge, this may well be correct, but that will not stop us from going through our assessment. What may be acceptable to one SIPP provider may not be something another provider would be prepared to take on. A good example of this is that some large SIPP providers will not allow commercial property to be held in a SIPP, despite HMRC guidelines clearly making provision for this.

We also have the FCA’s non-standard criteria to consider. Just because an investment falls into this category does not make it an automatic “no”. However, IPM are more cautious with these types of investments, and we would only progress with these if our stringent, non-standard asset assessment can be completed.

Get in touch

We can “referee” your SIPP decisions and provide support on complex cases. Email info@ipm-pensions.co.uk or call 01438 747151.