The importance of a trust deed when owning property with a SIPP: A TOLATA 1996 perspective

Joint property ownership is increasingly common, especially as individuals seek to diversify investments through vehicles like a SIPP or a SSAS. The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) gives courts the power to resolve disputes between co-owners, declare beneficial interests, and order sales. Under TOLATA, the intentions of the parties and the terms of any trust deed are central to determining each party’s rights. A trust deed is the primary evidence of the intention for how property is held and so without one, courts may have to infer intentions, which can lead to uncertainty and costly litigation.

What is a trust deed?

A trust deed is a legal document that sets out the terms on which property is held by trustees for the benefit of beneficiaries. Where property is jointly owned with a SIPP or a SSAS, the trust deed will specify:

• the proportion of the property owned by each party;
• the rights and responsibilities of each owner;
• how income and expenses are shared; and
• what happens if one party wishes to sell or transfer their interest.

Why is a trust deed essential when a SIPP or SSAS is involved?

1. Clarity of ownership and interests

SIPPs are regulated pension schemes with strict rules about how assets are held and managed. When a SIPP co-owns property with another party, the trust deed provides clear evidence of each party’s beneficial interest. This is crucial for:

• satisfying HMRC and pension regulations;
• avoiding disputes over income, expenses, and capital gains; and
• ensuring the SIPP’s interests are protected and ring-fenced from the personal affairs of the other owner(s).

Though a SSAS is not regulated in the same way as a SIPP is, it is still subject to HMRC rules, and it is therefore advisable to have a trust deed in place for the same reasons stated above.

2. Protection in the event of disputes

Disputes can arise if, for example, one party wants to sell and the other does not, or if there is disagreement over income distribution. A well-drafted trust deed:

• sets out dispute resolution mechanisms;
• clarifies what happens if one party defaults or becomes insolvent; and
• reduces the risk of litigation by providing a clear contractual basis for resolving disagreements.

3. Facilitating SIPP or SSAS compliance and administration

SIPPs and SSASs must comply with pension law, including restrictions on “connected party” transactions and requirements for arms-length dealings. A trust deed helps ensure:

• the SIPP/SSAS’s share is properly recorded and protected;
• all transactions are transparent and compliant with pension rules; and
• the SIPP/SSAS trustee’s duties are clearly defined.

How Birketts can help

Birketts has a dedicated SIPP and SSAS real estate team which acts for many of the country’s leading SIPP and SSAS providers. The team deals with all elements of commercial property transactions with a crucial understanding of the nuances of property investment under these schemes. If you require legal advice or assistance with a property transaction involving a SIPP or SSAS, our expert team is ready to assist.

We also have a dedicated property disputes team, within which we have experienced specialist lawyers dealing with trust/TOLATA issues, who can advise where a dispute arises, or where expert input is required to resolve a particular trust issue. To get in touch with the team, please visit our page.