SIPP FAQS
If you have a question which isn't answered below nor elsewhere on our website, please contact us by email (info@guardianpc.co.uk) or talk to us on 01254 660333.
What is a Self Invested Personal Pension?
Can i transfer Protected Rights into my SIPP?
How much can I contribute in a tax year?
What tax relief will I receive?
What can I invest in?
Can I transfer existing assets into my SIPP?
Can I sell a commercial property that I currently own personally to my SIPP?
Is it possible to purchase a property that is VAT registered?
Can I transfer my SIPP elsewhere?
When can I retire?
What happens on death?
Do any of my SIPP benefits form part of my estate for Inheritance Tax purposes on death?
What is a Self Invested Personal Pension?
A SIPP is an HMRC registered pension scheme with a wide investment remit including commercial property. A Self Invested Personal Pension (SIPP) is a personal pension which allows you to save in a tax-efficient manner for your retirement. This gives the individual more control and flexibility than other pension arrangements. Being self invested, you make your own investment decisions, or you may appoint an investment adviser (who must be suitably authorised).
Can i transfer Protected Rights into my SIPP?
The speculation that this was about to be allowed has now proved to be correct and the DWP have anounced that 'Protected Rights' can be invested within a SIPP. The date for the commencement of this is 1st October 2008 however the smart investers are beating the inevitable bottleneck that will arise by switching their Protected Rights into an Appropriate Personal Pension Scheme. Guardian Pension Consultants are offering this facility now and the good news is that the cost will be the same whether you and / or your clients act now or wait and join the back of the queue in October. Ask about the Guardian GAPP Scheme: The Guardian Appropriate Pension Plan and get ahead of the game in switching your and / or your clients Protected Rights.
How much can I contribute into my scheme and receive maximum tax relief?
The Annual Allowance will increase each Financial Year as follows:
2007/08 to £225,000
2008/09 to £235,000
2009/10 to £245,000
2010/11 to £255,000
Employers can also make contributions on your behalf, within the above limits. Employer contributions will be paid gross and the employer will usually to able to claim the contribution as a business expense. Employers may be able to make contributions at a higher level than an employees earnings. If this is being contemplated, the employer should consult with the inspector of taxes to make sure the contribution is not deemed excessive.
An "In Specie" contribution can also be made. This is a contribution made by transferring an asset held personally or by the members company, to the SIPP. An employer may also choose to make an "in-specie" contribution to the SIPP. In Specie contributions in lieu of monetary contributions are also possible subject to certain conditions being met.
What tax relief will I receive?
The amount you contribute is net of basic rate tax. Guardian Pension Consultants will reclaim the tax on this contribution from the Inland Revenue. If you are a higher rate taxpayer you should reclaim the higher-rate directly from the Inland Revenue.
What can I invest in?
A SIPP can invest in the following:
- Stocks and Shares
- Cash Deposits
- Authorised Unit Trusts, OEICs & AIMs
- Trustee Investment Plans
- Stocks & Shares quoted on the Stock Exchange
- Gilts or other Loan Stocks
- Futures & Options
- Second Hand Endowment Policies
- Borrowings
- Unquoted shares
- Property
- Commercial property
- Agricultural land
- Commercial forestry
- Student accommodation
- Nursing Home
- Hotels
- B&Bs
- Youth Hostel
NB) Residential property whether in the UK or abroad is a taxable investment of a pension scheme and would be subject to tax. Residential property is not currently permitted within the Guardian SIPP.
Can I transfer existing assets into my SIPP?
You may be able to transfer existing assets that you own into your SIPP at the Trustees discretion.
Can I sell a commercial property that I currently own personally to my SIPP?
Yes. With the abolishment of the connectivity rule this gives schemes much more opportunity to invest in company and even member assets. The schemes now have the ability to purchase commercial property that is currently owned by the member or their company whether by using existing scheme funds to purchase the premises or by transferring the ownership of the property by way of a contribution, otherwise know as an in-specie contribution, subject to certain conditions being met.
Is it possible to purchase a property that is VAT registered?
It is possible for the Trustees of the SIPP to register for VAT purposes so that any VAT paid on the property purchase can be reclaimed. We recommend that you take advice from your Accountant or a tax expert regarding the suitability of registering for VAT.
Guardian are able to complete the necessary documentation to register the scheme for VAT, and also complete the quarterly VAT return, for an annual fee as per our fee schedule.
Can I transfer my SIPP elsewhere?
You can transfer your SIPP at any time. A SIPP from which you are drawing income can only be transferred if the receiving Provider is prepared to accept a SIPP in drawdown.
When can I retire?
You can retire at any age between 50 (from 2010 age 55) and 75.
What happens on death?
If death occurs before benefits are taken then amounts up to the lifetime allowance (£1.6million in 2007/08) can be distributed tax free. If benefits are being taken from the scheme, benefits within the lifetime allowance can be distributed to a spouse to continue to provide benefits. A lump sum can be taken by the members spouse or dependents but will be subject to 35% tax charge.
On death after age 75 and taking Alternatively Secured Pension (ASP), no lump sum death benefit can be paid. If there is a spouse or dependants then the fund must be used to provide them with a pension (if the spouse is under 75 the Unsecured Pension (USP) rules will apply rather than ASP), or to purchase an annuity. If there is no spouse or dependants then the fund can be paid to charity tax free, or to other members of the same Registered Pension Scheme so long as they have been nominated previously (i.e to other nominated members of the Guardian SIPP), however this is subject to tax charges and Inheritance Tax.
It is important to note that the residual ASP fund cannot be paid out to beneficiaries personally, nor to other pension schemes. Where funds are paid to other family members as previously described, it is important to note that Inheritance Tax would apply.
Do any of my SIPP benefits form part of my estate for Inheritance Tax purposes on death?
As the Guardian SIPP is written under trust, in normal circumstances any lump sum paid on death before age 75 is normally paid at the Trustees discretion and hence falls outside of the members estate for inheritance tax purposes.
Members should ensure that the SIPP Administrator is provided with a Nomination of Beneficiaries form whereby the member nominates their preferred recipients of any lump sum for the Trustees to consider.
After age 75 the rules change. If the member has continued to draw their pension from the fund in the form of an Alternatively Secures Pension, the value of the fund is taken into account as if it were part of the members estate and taxed accordingly unless the fund is used to provide a dependant with a pension or annuity or the member has no dependants and has nominated a charity to receive the ASP fund.