The removal of residential property from the list of assets qualifying for Self Invested Personal Pension Schemes investment will affect the plans of relatively few farmers, say accountants.

In his pre-Budget report Chancellor Gordon Brown responded to fears that the rural property market, in particular, would be driven higher by this investment opportunity.

But there are other changes to SIPPS rules from next April.

Maximum pension contribution levels are being raised from next April, but SIPPS borrowing limits are being cut radically.

For example, SIPPS can currently borrow up to 75% of the cost of an investment.

But from April 2006 they will be able to borrow only 50% of the net value of the fund.

Transactions between connected parties will be subject to new rules and although these are generally being relaxed, farmer investors need to be certain that they are not breaching connected party rules, say advisers.

Guidance on this is available on the Treasury website (www.hm-treasury.gov.uk), but investors should take advice on their individual circumstances and proposals.

Land and commercial property will still qualify as SIPPS investments, but remember that a benefit in kind tax will be charged for the use of any asset that is not paid for at a commercial rate, says Shelagh Hamer of NFU Mutual.

For example, if land is held in a SIPP, but farmed by a farming partnership, the partnership must pay a realistic market rent for that land.

From 2010, the minimum age at which personal pension benefits can be taken will rise from 50 to 55.

With more than one generation trying to live off many farms, this change makes pension provision even more important, says Mrs Hamer.

fwbusiness@rbi.co.uk