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Standard fears Govt U-turn on Sipp tax breaks

Standard Life has written to the Revenue seeking confirm-ation that the Government will not perform another Sipp U-turn and block tax breaks for private companies investing in their own businesses.

Head of pensions policy John Lawson says directors of limited companies with SSASs can switch their assets into a Sipp to take advantage of Sipps’ more relaxed investment regime.

Up to 100 per cent of Sipp funds can be held in unquo- ted shares compared with just 5 per cent of SSAS assets.

This enables directors to carry out a new share issue to finance the business or use the funds in a Sipp to help finance a management buyout although Lawson says there are inherent risks in taking this route.

In his letter, Lawson is asking the Revenue for confirmation that there are no plans to alter the rules relating to these tax breaks.

He says SSASs maintain one advantage over Sipps in that they can can make loans whereas a Sipp cannot make loans as loans can only be made to sponsoring employers and a Sipp by definition does not have a sponsoring employer. As a result, it would ultimately be more attractive for a small limited company to raise capital by issuing new shares and converting its SSAS into a series of Sipps.

Lawson says: “This all seems like good news for Sipps. However, I am painfully aware that we have been there on residential property.”

Suffolk Life director of sales and marketing John Moret says: “If the rules were changed now at this late stage, I would be gob- smacked. But what this does prove is that the Treasury is perpetuating two regimes when you only need one.”

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