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Case study: SIPP to SSAS in-specie property transfer

29 November 2020

Dave Erentz, business development consultant, Talbot and Muir, looks at what paraplanners should be aware of in the process of SIPP to SSAS in-specie property transfers

John, Jane and their son, Jack, are members of the JJJ Pension Scheme, a Small Self Administered Scheme (SSAS). John and Jane have recently retired from the family run veterinary business, leaving Jack as the sole director. Jack’s wife, Caroline, has now started working for the business and their two children, aged 18 and 20, are both studying at university in the hope of joining the family business in the future.

The SSAS holds two properties, the first of which is valued at £500k and the family business is paying £35k per annum rent as the current tenant. As the tenant is connected, the rental value has been confirmed by way of an independent valuation from a RICS qualified surveyor. The second property was recently valued at £300k and is leased to an unconnected tenant who are paying £25k per annum in rent.

Both of the property values have recently been confirmed by an independent valuation from a RICS qualified surveyor.

In addition to the properties, the SSAS also holds a TIP valued at £1m. This gives a total fund value of £1.8m of which John has a 40% share, Jack 35% and Jane 25%.

The family arrange a meeting with their financial adviser in order to review their pension arrangements. As John and Jane have retired from the company, the family feel it would be more appropriate for Jack to retain the sole interest in the company premises moving forward.

Jane has no desire to continue to be invested in directly held commercial property – her main priority is to ensure that she has sufficient liquidity in her pension and she would like to take her Pension Commencement Lump Sum (PCLS). John wishes to retain the second property due to its high rental yield but would still like to feel he has sufficient liquidity in his pension to cover any future pension payments he may need.

The possibility of notionally earmarking the property assets was considered. However, as this would not be legally binding, it was decided that John and Jane transferring to separate SIPP arrangements would be more appropriate. Jack will remain in the SSAS and with the intention of adding Caroline as a member trustee immediately and they will consider his children being added in the future once they’ve joined the family business.


Having formally provided the family with his recommendations to meet their goals, the adviser arranges for the following:

  • The £1m TIP held in the SSAS is fully surrendered.
  • A new SIPP is established for Jane who makes a cash transfer of her share of fund worth £450k.
  • They ensure that the RICS valuation of the £300k property has been undertaken within the last six months.
  • A new SIPP is established for John. The property valued at £300k is transferred in-specie and the remaining £420k of his share of fund is transferred in cash.
  • A solicitor is appointed to transfer the property in-specie. As the trustee firm is already named on the title deeds and has previously completed due diligence on the property, new searches are not required which helps to keep costs down.


After the transfer, Jane immediately takes her full PCLS and the remaining crystallised funds are invested in a DFM. This ensures that Jane now has the required liquidity for any future income payments and no longer has the added administrative burdens of being invested in directly held commercial property.

The property worth £300k is now held in John’s SIPP and the unconnected tenant continues to pay £25k per annum rent. John invests the residual funds from his transfer and the ongoing rental receipts in to a DFM which gives him greater levels of liquidity.

Jack remains in the SSAS which continues to receive £35k per annum rent from the family business. After John and Jane have transferred out of the scheme, Jack has £130k remaining as cash which he deposits in a 1 year fixed term deposit account as there are plans for some development work to take place on the property the following year.

As planned, Caroline is added to the SSAS and regular employer contributions are set up on her behalf. A review of her retained benefits is to take place with a view to considering the merits of transferring these to the SSAS. When their children start working for the company, they will be added to the scheme and employer contributions will be made for their benefit.

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