The HMRC rules allow for a greater range of investments to be held than personal pension schemes, notably equities and property.
The rules and conditions for a broader range of investments were originally set out in Joint Office Memorandum 101 issued by the UK's Inland Revenue in 1989.
James Hay Partnership, the parent company of then Personal Pension Management, offered the first SIPP product.
The role of the scheme administrator in this situation is to control what is happening and to ensure that the requirements for tax approval continue to be met.
The assets that are not subject to a tax charge are: [5] Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties (and therefore typically not allowed by SIPP providers) include: [5] Contributions to SIPPs are treated identically to contributions to other types of personal pension.
[7] The SIPP provider claims a tax refund at the basic rate on behalf of the customer (i.e. you pay £2,880 and your fund contribution for the year will become £3,600).
At any time after the SIPP holder reaches early retirement age (55 from April 2010) they may elect to take a pension from some or all of their fund.
In March 2015, a further reduction to £1 million was announced from 6 April 2016, with the allowance to be adjusted for inflation, based on the Consumer Price Index, starting in 2018.