Gold bullion: the only physical commodity allowed in a SIPP or SSAS
Few expected – and even fewer predicted - the outcome of the General Election held on 8 June.
Theresa May had called the snap election, in order to give both her, and her negotiating team, a clear Parliamentary majority and a decisive mandate for the ‘Brexit’ negotiations that commenced on 19 June. The result of the election has given her neither. The UK now has a minority Conservative government, and an effective rejection by the electorate for a ‘hard Brexit’ deal.
Against such a backdrop of political and economic uncertainty, assets traditionally regarded as ‘safe havens’ always benefit from ‘interesting times’ such as these. One such asset is gold, and John Mulligan, head of member and market relations at the World Gold Council, recently said, “Gold is not a universal panacea, but as a high quality liquid asset it can readily be used when other assets are under pressure and investors have few options to turn to, to protect their capital”.
"Gold is not a universal panacea, but as a high quality liquid asset it can readily be used when other assets are under pressure and investors have few options to turn to, to protect their capital."
Investment grade gold Bullion can be held as an asset of a SIPP or SSAS, and will not constitute ‘taxable property’, provided that it is in a form acceptable to HM Revenue & Customs (HMRC). This is currently defined as a bar or wafer with a purity of not less than 995 thousandths, and professionally stored.
In addition, in August 2014, the Financial Conduct Authority added physical gold Bullion to its list of ‘standard assets’, in anticipation of the new capital adequacy regime for SIPPs that commenced from September 2016.
Crucially, however, other forms of bullion and precious metals, (including silver, platinum and palladium), cannot be held as an asset of a SIPP or SSAS, and we have recently updated the ‘Physical Commodities’ section of our SIPP ’Allowable Investment Schedule’ to make this clearer.
The clarification was prompted by the following real-life case study, (although the name of the investor is fictitious), which demonstrates how easy it can be for an investor to end up with commodities other than gold Bullion in their self-invested pension; particularly given that SIPP and SSAS members now have access to a range of low cost, online platforms that buy, sell and vault gold on behalf of the investor.
Case study
Wayne is aged 60 and has a SIPP. Upon opening a gold Bullion trading account with an online platform, and unbeknown to the SIPP Trustee, Wayne’s SIPP received four grams of silver Bullion as a complimentary promotional gift from the platform operator, as a thank you for opening the account with them.
Unfortunately, silver Bullion is defined by HMRC as ‘tangible moveable property’ (TMP), which - when held by a self-invested pension - creates an unauthorised payment, on which tax penalties then arise; both for Wayne personally, and also for the Scheme Administrator of his SIPP.
Fortunately, this was quickly discovered by Wayne’s Client Manager, who arranged for the platform operator to immediately remove the silver Bullion holding, as though it never constituted an asset of Wayne’s SIPP. As no consideration had passed from Wayne’s SIPP to the platform operator for the silver gift, an unauthorised payment – and the resulting tax charges - was therefore avoided.