Home | Business | Top Tips
In this first of three installments from Cornhill Asset Management, you will discover what a SIPP is and you will learn why investing in one is a serious option for many investors. What is a SIPP? A SIPP is a personal pension that allows you to control the investment management. Why invest in a SIPP? People are taking a greater interest in where their pension capital is invested. Today’s markets offer a wide range of investment products, giving you greater opportunity to control your investment risk and the returns you can live from in your well-deserved retirement. There is significant demand for different types of investments away from the standard managed funds, which have typically failed to provide a clear picture to you of what you are invested in. The past decade has seen a more mobile and dynamic workforce in the financial sector, making it difficult to ascertain that the person responsible for building the track record of the fund you originally invested in is still in charge of that fund’s investments. With managed funds, there is no direct contact whereas, depending on where you invest, you can with your SIPP. Combining the power of the SIPP with the diversity of investments offered by Cornhill Asset Management, investors gain access not only to our portfolio of investments but also those offered by other financial institutions. Cornhill Asset Management has engaged the services of Strategic Asset Managers (UK) Ltd, a specialist firm of Independent Financial Advisers, to provide advice to clients who express an interest in SIPPs. With a SIPP there is complete transparency of charges, which allows you to see if you are receiving value for money. Some of the charges are on a fixed-fee basis, which means the more you invest the greater the benefit to you. There are no complicated allocation rates or incentives, such as loyalty bonuses, because the reality with these features is that you pay additional management charges which can be expensive and difficult to determine. There is no UK capital gains tax on the sale of investments held in your pension fund, and currently no additional UK tax is applied to investment income once it is received by your pension fund. Interest on cash in your pension fund’s bank account is credited gross. Where tax has been deducted from other interest received by your pension fund it will be reclaimed wherever possible and credited to your pension fund’s bank account. Tax credits on UK dividends cannot be reclaimed. All eligible contributions to your SIPP will attract tax relief of up to 40% of the gross contribution. What investments are permissible in a SIPP? There are no restrictions, beyond those imposed by HM Revenue & Customs from time to time, on the investments that may be held a SIPP. Your pension fund can, therefore, be invested in a wide range of investments, including: o Stocks and shares, both quoted and unquoted o Open-ended investment funds o Insurance company funds o Commercial property o Loans to unconnected parties, and o Cash deposits It is also possible to borrow up to 50% of the value of your pension fund for any investment purpose. All investments must be acquired, disposed of or leased on commercial terms. If your pension fund invests in certain investments known as Taxable Property – such as residential property, whether in the UK or overseas - or tangible moveable property, then tax charges will be imposed that will negate the tax advantages that would otherwise apply. These tax charges will apply if the investment in Taxable Property is made directly or indirectly, although there is an important exception for indirect investment in Taxable Property made through any of the following ‘genuinely diverse commercial vehicles’: UK REITS (Real Estate Investment Trusts) that do not allow you, or anyone connected with you, to occupy or use the property. Trading concerns that satisfy the following conditions: o The vehicle’s main activity is the carrying on of a trade, profession or vocation o Your pension fund, together with any associated person, does not have control of the vehicle o Neither you, nor anyone connected to you, is a ‘20% director’ o Your pension fund does not hold an interest in the vehicle to enable you, or anyone connected with you, to occupy or use the property Vehicles which satisfy the following conditions: o The total value of the assets held by the vehicle is at least £1 million or it holds at least three residential properties, and in either case no asset that is Taxable Property has a value that exceeds 40% of the total value of the assets held o The vehicle is a private limited company controlled by five or less directors and it is not a close company or, if it is not resident in the UK, would not be a close company if it were resident in the UK o The vehicle does not have as any of its main purposes the direct or indirect holding of one or more animals used for sporting purposes Furthermore, the following conditions must be satisfied: o Your pension fund does not hold an interest in the vehicle to enable you, or anyone connected with you, to occupy or use the property o Your pension fund, together with any associated person, does not hold more than 10% of the vehicle. Important Note Please retain this document for reference purposes. It is issued by Cornhill Asset Management Ltd and Strategic Asset Managers (UK) Ltd and is based on our understanding of how the current legislation applies as at 1 January 2007. There may be subsequent alterations in response to legislative and regulatory changes. This document is for information purposes only and does not constitute advice. Strategic Asset Managers (UK) Ltd is an appointed representative of Strategic Asset Managers Ltd. Cornhill Asset Management Ltd and Strategic Asset Managers Ltd are Authorised and Regulated by the Financial Services Authority, and Cornhill Asset Management Ltd is an introducer to Strategic Asset Managers (UK) Ltd.
Article Source: http://www.fubrus.com
Derek Stewart of Strategic Asset Managers (UK) Limited on behalf of Cornhill Asset Management. Derek entered the financial services sector in 1978 working for one of the large insurance companies. In 1981 he joined a national firm of Independent Financial Advisers and has remained independent ever since. In 1990 Derek managed Greig Middleton Financial Services in Scotland and in 1992 became Regional Director for Scotland & Northern Ireland of what became Sedgwick Noble Lowndes. He directed the company through a merger and numerous restructures before deciding to set up his own independent business which became Strategic Asset Managers.
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
