Pension Advice Pages
Home > Pension Guides > Your SIPP > SIPPs and Tax

 

SIPP - Self Invested Personal Pension

 

We introduce advisors who ensure your SIPP is fit for purpose.
Put simply, a Self invested Personal Pension Plan or SIPP is a personal pension plan which provides more individual control through greater flexibility and increased investment choices. Whether you’re looking to review your existing arrangement or set up a new SIPP, we have a qualified professional SIPP advisor for you.

 

 

pensions annuities
pensions
                   
£   Please enter the total value of your pension. If your enquiry relates to a new pension enter your desired annual contributions

pensions


pensions

 

 

 

 

The age at which you are expecting to retire
pensions
pensions

pensions

 

 


 

pensions


 

Our Privacy Policy - Terms and Conditions


pensions

 

 

pension-providers

first step

 

How do I maximise my SIPP investment?

A specialist SIPP advisor will take the time to ensure no stone is left unturned and along with the following factors will help you to consider what’s important:

Begin by exploring your purpose in having a SIPP! For example, having access to a wider selection of investment choices through a SIPP is no good if you don’t use them.

Your number of years or term to retirement should greatly influence your investment strategy and the content of the portfolio contained within the SIPP. Your advisor can help you understand the impact of years to retirement as well as the corrosive effects of inflation.

Discuss your risk profile with your advisor before purchasing your SIPP investments. Taking a more cautious approach may require you to work a year longer while being too adventurous might mean never retiring at all.

Performance and performance reviews as with any pension remains a vital ingredient. If your SIPP underperforms you will need to either alter your investment strategy or increase contribution levels. A SIPP advisor can provide updates and recommend strategies that are designed to keep you on track.

All SIPPs receive the same favourable taxation treatment on contributions, provided you and your trustee operate within the HMRC guidelines. Failure to comply with the guidelines including investment in to unauthorised assets and can lead to significant taxation consequences.

Charges in your SIPP can be as a transaction cost (buying and selling shares), as a fixed amount, a percentage of the asset value or both. Take time to explore the charges with your advisor who will be able to pinpoint the best charging structure for you

Choosing your Trustees can take time because every trustee operates slightly differently. Their rigidity or flexibility will influence your SIPP’s ability to invest more widely into areas like private equity or individual share purchase. Specialist SIPP advisors will have a practical working knowledge and will often be on first name terms with trustees.

 

The Cost of good SIPP advice:

Good SIPP advice and paying for it should really be viewed as a worthwhile investment that keeps you on track with your retirement planning goals. There is a cost of not taking advice and who knows what that disaster fund could amount to as well as a cost for advice which will be disclosed to you by your SIPP advisor.

The best SIPP advisors will save you more than they would even cost over the term to retirement when combining improved investment performance and reduced costs.

You are really investing in a professional who will tell you directly the way it is, pointing out in good times that you can have a contribution holiday and conversely telling you to put more money in when performance is lacking.

Take the next step with your SIPP enquiry today and let us introduce you to a suitably qualified advisor – complete our form today

 

0
SIPPs and Tax
February 15th, 2011 | Your SIPP

Sipp Tax ReliefSIPPs offer you tax benefits in the same way as personal pensions do. This relief is designed to increase a pension pot and acts as an incentive. The government allows pensions to benefit from a level of tax relief that varies depending on your earnings.

Tax Relief
When it comes to SIPPs, the government will add 20 pence for every 80 pence you enter into a SIPP. Your provider claims this tax relief on your behalf which is then added to your account. Even better news is the fact that just about everyone who is a UK resident and under the age of 75 is eligible. It does not matter if you are under 18 or unemployed. Those who earn enough money to be included in the higher rate of tax (40%) can claim up to another 20 pence for every £1 gross they contribute from either the nearest tax office or during the filling in of a tax return.

Essentially, a SIPP worth £15,000 would only cost you £12,000 if you fall under the basic rate taxpayer bracket. Higher earners may only have to pay £9,000. The highest tax rate is 50% and it is possible for these taxpayers to claim a further 10 pence per £1 gross contribution. This means a £15,000 SIPP may only cost those on the high rate of tax £7,500. It should be noted however that there are restrictions on higher earners.

Income Tax
Investments made outside the SIPP banner are subject to capital gains and income taxes. Investing in funds under the guise of a SIPP however means that the profits earned escape such charges. When you combine this with the tax relief, it is easy to see why SIPPs are such a popular option. It should be noted that you cannot claim a refund on any taxes already paid on dividends.

Although all contributions paid by an employer count as gross, it can be put against the taxable profits of the company if it is deemed to be a valid business expense. Employer contributions should also be free from National Insurance and tax.

When your retirement day comes, it is possible to withdraw up to one quarter of your fund tax-free. The remaining money must remain where it is counted as taxable income. In the event that you die before utilising your retirement benefits, it can be used as a form of taxable income for one of your dependants. There is also the option of leaving it to a selected beneficiary as a one-off payment which would be free of tax.

Don’t Delay
Remember, the amount of tax relief you are entitled to depends entirely on your individual circumstances. Due to the global recession, the UK is suffering financially and the new Conservative government are likely to effect changes to the above rules in the very near future in a bid to curb spending. Therefore, it would be wise not to procrastinate when deciding on a suitable SIPP as the tax situation is subject to change.

If you haven't found all the answers that you are looking for you can find similar content in the Your SIPP sections, contact an adviser at the top of the page, or you could try these related posts:

Why Are SIPPs So Popular?
SIPPs are not some magical plan which are wildly different from traditional pensions. Like stakeholder or personal pensions, you still have retirement options, limits...
Differences between a SIPP and a Personal Pension?
Before Pension A-Day ( a key reform period) SIPPs were largely the domain of wealthy investors. Recently the opportunities provided by SIPPs have become more widely...
Introducing Self Investment Personal Pensions
The SIPP (Self Invested Personal Pension) has caused quite a stir since it has become available. The benefits of SIPPS are manifold. For a start, would-be investors...
Pension funds and children
With the end of the child trust fund (CTF), the latest financial innovation has arrived on the scene. Now you can start up a pension fund for your children, though...
What Can I Invest In With A SIPP?
SIPPs offer so much more in terms of investment than personal pensions. You could elect to put your money in collective investment funds such as Exchange Traded...