Sipps News
Potential for Maximising SIPP Benefits
There are a variety of areas where a SIPP can be used to make a significant difference to an individuals estate and tax planning
- Doubling tax benefits can be achieved by investing in tax efficient vehicles such as a Venture Capital Trust (VCT) which allows individuals to get a 30% tax rebate and then rolling the investment into a SIPP qualifying the individual for a further 40% tax rebate.
Example : Investor A invests £100,000 into a VCT and qualifies for a £30,000 tax rebate. If at the end of a VCTs five year investment it is worth £130,000 (a 5% annual growth) and this is then invested in a SIPP, the investor would get a 40% tax rebate (£52,000). That would mean that in effect, an £18,000 personal contribution could be converted into a pension fund of £130,000.
- Inheritance tax planning. Unlike a personal pension, a SIPP can be retained as an investment by the beneficiaries of a will, which would mean that the pension investment can be retained and passed on without inheritance tax from one familys generation to generation
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