It may not be the most obvious asset to hold in a Self-Invested Pension Scheme (SIPP) but there is no reason in principle why you cannot do so. Provided that the woodland generates an income for the fund it will qualify as a commercial property, so how can this be done?
In my case, I have a SIPP which until recently was invested in the stock market. I decided earlier this year that I no longer wanted to run the risk of losing what I had worked hard to build up and began to look at other options. I was also interested in buying and managing a small wood because of my interest in natural history and ecology.I approached my pension trustees and hey confirmed that there would be no problem in my SIPP owning a wood. They sent me a questionnaire to complete and arranged for an independent valuation to be carried out of the freehold value and rental value of the wood. It is very important that this is all done on an independent and arms-length basis to avoid any problems with the Revenue.
To cut a long story short, my Pension Trustees then bought the wood (through woodlands.co.uk) and granted me a lease in the form of a farm business tenancy at the rental set out in the valuation (£100 per acre per annum). The rent (which must be paid on time and in full) is paid to the pension on a quarterly basis and will therefore increase the value of the pension over time. Although I do not “own” the wood it feels very much like I do and when retirement comes there would be nothing to stop me from buying the wood from my SIPP at the open market value at that time.
The process worked out smoothly from start to finish and I benefited from having Trustees who knew exactly what they were doing. I am aware that this is not always the case and that some pension trustees are reluctant to invest in farmland or woodland. It is possible though to transfer your fund and I’d be happy to pass on my pension fund’s details to anyone who would like to know more.