UK - Schemes will be able to borrow money for the first time, under changes outlined in the Finance Bill.
From April 2006, Inland Revenue registered schemes will be able to borrow an amount worth up to 50% of their total value.
Anything exceeding the limit will be taxed at 40% and the loans will have to be repaid within five years – which can be extended for an additional five years – effectively giving schemes a decade.
At the moment, only small self-administered schemes and self-invested personal pension schemes can take out loans, which have to be repaid within eight years.
SSASs can currently borrow a total equal to 45% of their net assets and three times the ordinary annual contribution paid by members or employers.
Presently, SIPP schemes can only borrow money to purchase a property, and this amount is limited to 75% of the price of that property. These restrictions will disappear after April 2006.
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