TerryGoX

I just received a set of new terms and conditions from AJBELL

This has been updated to include the condition

24.1 The account holder for a SIPP must be a UK resident for tax purposes at all times.

Does that mean they are shutting down non-residents?

Anyone else chasing on this?

MidAtlantic

I received this by email, presumably you did also.
In that email it says, "This clause only applies to customers who are opening a new SIPP..."
However, that is in the email, not in the actual terms and conditions, so I think it is an ominous sign.

leuler

The email that I received included this paragraph - "This clause only applies to customers who are opening a new SIPP or Junior SIPP with us." That should mean no change to existing accounts.

Glasgow Girl

Hopefully this only applies to new accounts, see the underlined terms below. I am not at all surprised by this, they were the only UK based SIPP administrator left taking on board US residents. The rest of them did this several years ago, and I believe they have honored existing SIPP accounts. This means that the only option for IS residents wanting to transfer to a SIPP is to use one of the offshore providers.

We’ve made an update to our terms and conditions. We’ve added clause 24.1 to confirm that you need to be a UK resident for tax purposes to hold a SIPP with us. This clause only applies to customers who are opening a new SIPP or Junior SIPP with us. For a Junior SIPP, it applies to both the parent/guardian and the child.

TerryGoX

That extra sentence about NEW accounts is not in the formal terms and conditions - it is ONLY in the email. I spoke to someone in AJBELL and they are having meetings about what they plan to do moving forward. This was news to the investments teams and they learnt about the same time as we did.

I have received 4 calls today from offshore companies - coincidence?

Glasgow Girl

I believe that when HL closed SIPPs to US residents, they allowed existing account holders to retain the SIPP but gave them 60 days to liquidate any investments that would be considered a mutual fund. ETFs were still allowed. If anyone has a SIPP with another UK based provider (not offshore) it would be useful to hear their experience. Perhaps AJ Bell will do the same, we will have to wait and see. At least that would provide an opportunity to manage the tax consequences.

There are some decent offshore SIPP providers that are safe enough but most charge high fees and many require that they manage the funds for you, or that you use a financial advisor as an intermediary, which I personally do not like. Be interested to see what everyone finds as an alternative. I used to be with NOVIA Global and they were decent but I had to go through a financial advisor to make investments and that was just an unnecessary level of management that I did not want and certainly did not want to pay for.

TerryGoX

I asked for clarification from AJBell and they sent this via email

I can confirm that this new rule is only for new business and does not affect ongoing accounts or transfers in.

Glasgow Girl

Thanks for the update. Good news. Let’s hope it stays that way!

leuler

Thanks for the confirmation and hopefully that will remain the case. Interestingly, this is much wider than just US residents, which is what most of the other restritctions are. This new wording is anyone who is not UK resident - I think there are over a million UK pension recipients in Spain and Europe and they are also impacted.

PMG61

While it's good that this doesn't immediately affect existing SIPPs immediately, I do think it's a warning that even existing accounts may be affected in future. Fortunately for me, my SIPP is now in drawdown. I'm going to revise my plans and will aim to empty our SIPPs as soon as possible without taking a big hit on marginal taxes. Hopefully the hammer doesn't drop for the next few years (or ever).

Glasgow Girl

I agree. It would be prudent to work out a contingent Plan B in the event that further restrictions follow, most likely access to anything considered to be a PFIC.

JamboJuice

Does this mean, if I’m resident in the U.K. now but wanting to move to the US within the next few months, I should transfer my SIPP to AJ Bell now? Should I subsequently become US resident after opening would they shut it down? How would that work with other providers also

Glasgow Girl

AJ Bell was the last UK based provider that allowed US residents to open a SIPP. Now that door has been closed the only options are offshore providers which IMO area much less desirable for a number of reasons. It sounds like AJBell will still allow transfers in from non UK residents but presumably only to an existing account. Personally, I would not depend upon that lasting very long, so if you want to transfer I would get it done before you leave the UK. At the very least you need to get an account opened. Will they shut it down in the future, no one knows, probably not even them. But its possible they they could put restrictions on what you can invest in, that is what Hargreaves Lansdown did to existing US SIPP account holders. I would have a Plan B in case there are further changes in the upcoming years. I would be shocked if there are not, time does nothing but make foreign assets harder and harder to manage for US immigrants. Over time I would expect most of the SIPP providers to eventually converge upon the same set of rules for existing US based account holders since they are all subject to exactly the same regulations, and will make decisions accordingly. I was surprised AJBell held out this long on allowing US residents to open accounts.

Why not ask your existing provider what their rules are before you transfer?

JamboJuice

Thank you for replying! I need to switch anyway as my current SIPP is with Vanguard and they only have PFIC options if I was to move to the US. I was also wondering if I should transfer non-SIPP pensions into this AJ Bell SIPP (e.g Aviva/Scottish Widows) but based on what you’ve said probably best not to.

I have an AJ Bell LISA and I asked them previously, what would happen if I became US resident, would my account be closed etc and they just told me to let them know if/when it happens and then they would tell me. So not very helpful

porkedpie

A couple mentions to PFIC issues inside SIPPs here. It was my understanding that UK pension accounts including SIPPs were immune to PFIC rules? The internet seems to agree:
https://investmentsforexpats.com/sip...ats-in-the-uk/
https://www.expattaxonline.com/ameri...ipp-in-the-uk/

Am I missing something?