SIPP holders face additional fees for P2P investments

Self-invested personal pension (SIPP) holders are charged more for investing their SIPP money in peer-to-peer lending platforms, as it is classified as a non-standard asset that requires more due diligence.

John Dowding, Technical Director of Morgan Lloyd, said Peer2Peer Financial News the SIPP administrator has an additional charge for his clients who invest in P2P.

“This covers the extra administration and due diligence that is required for these types of arrangements,” he said.

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“Regulatory capital and risk increase in proportion to the size of the investment, hence the tiered fees. “

This effectively makes it more expensive to invest in a P2P SIPP, as it is only economically viable if a large investment is made.

Read more: Which P2P platforms offer SIPP?

Dowding said Morgan Lloyd offers a free SIPP where all investments are on its own platform or a low cost SIPP where other platforms and standard assets can be held, which is charged between £ 150 and £ 350. per year.

However, Dowding said the typical SIPP administrator’s fee for P2P investments, which is classified as a non-standard asset, is 0.35% on the first £ 500,000 and 0.25% on everything else. that exceeds £ 500,000, subject to a minimum of £ 1,350 per year.

Read more: Relendex is interested in the SIPP market

A SIPP is a personal retirement tax envelope that people can contribute to and use to flexibly manage their investments in a tax-exempt environment. They can contribute up to 100 per cent of their annual income, with tax relief applying on contributions of up to £ 40,000 per year, with no capital gain or income tax.

The concept was first introduced in 1989, but P2P platforms were only allowed to access the program in 2016. A number of platforms are now accepting P2P investments through SIPPs, including CrowdProperty , Proplend, Money & Co and Ablrate.

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