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Jun 19
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SIPP TaxSIPP, SIPP Pension, SIPP Tax Comments Off
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Saving in a pension such as a SIPP has significant tax benefits. The government will contribute 20% of every gross contribution you pay - meaning a £1,000 investment in your SIPP costs you just £800. If you’re a higher rate tax payer, the tax benefits could be even greater. In the above example you could claim back as much as a further £200 via your tax return if you have sufficient income or gains in the higher rate tax bracket.
Restrictions introduced in the Budget on 22 April 2009 limit the contributions of anyone whose total annual income has reached £150,000 from 07/08 onwards. Download our Budget fact sheet for more details.
When you wish to withdraw the funds from your SIPP, between the ages of 55 and 75 (50 and 75 before April 2010), you can normally take up to 25% of your fund as a tax free lump sum. The remainder is then used to provide you with a taxable income.
Newer styles of pension plans run by insurance companies now tend to offer a limited selection of funds from other fund managers, plus their own in-house funds.
SIPPs offer the widest possible choice of investments for individual pension plans, allowing holders to pick funds from across the market.
A SIPP can hold all the asset classes required to give you the chance to build a diverse investment portfolio that has just the right level of risk you are happy being exposed to. SIPPs are now a real option to cost effective pension planning.