Investment Life & Pensions SIPPS Supplement June 2014 | Page 7

May 14_27.qxd

08/05/2014

09:34

Page 1

Connected-party
Transactions

Avoiding pitfalls
John Glover says that when dealing with connectedparty transactions it is vital to work with a provider that
understands the pitfalls as well as the benefits
Connected-party transactions became
permissible within SIPPs in April 2006, and
have proven popular over the last few
years due to the current economic
environment, as individuals look for
greater interaction between their pension
scheme and business.
When the pension scheme enters into a
transaction with either the member or their
business, it normally involves the purchase or
sale of an asset. Traditionally this would be a
commercial property, which would be sold to
the pension scheme and leased back to the
business. This would result in the asset being
held in a very tax-efficient environment,
benefiting from both future rental income