What is a SIPP? By White Knight Associates

White Knight Associates have found recently that a lot customers have been asking questions about the benefits of SIPPS and what they are all about. So White Knight Associates  decided to put a quick article together.

Self-Invested Personal Pension

A Self-Invested Personal Pension (SIPP) is the name given to the type of UK government approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of HM Revenue & Customs (HMRC) approved investments.

SIPPs are a type of Personal Pension Plan. Another subset of this type of pension is the Stakeholder Pension Plan. SIPPs, in common with personal pension schemes, are tax "wrappers", allowing tax rebates on contributions in exchange for limits on accessibility. The HMRC rules allow for a greater range of investments to be held than Personal Pension Plans, notably equities and property. Rules for contributions, benefit withdrawal etc are the same as for other personal pension schemes.

Investment choice

Investors may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees (usually the SIPP provider).

All assets are permitted by HMRC, however some will be subject to tax charges.

The assets not subject to a tax charge include: 

Stocks and shares listed on a recognised exchange

Futures and options traded on recognised futures exchange

Authorised UK unit trusts and OEICs and other UCITS funds

Unauthorised unit trusts that do not invest in residential property

Unlisted Shares

Investment trusts subject to FSA regulation

Unitised insurance funds from EU insurers and IPAs

Deposits and deposit interests

Commercial property (inc. hotel rooms)

Ground rents (as long as they do not contain any element of residential property)

Traded endowments policies

Derivatives products such as a Contract for difference (CFD)

Gold bullion, which is specifically allowed for in legislation

Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties (and therefore typically not allowed by SIPP providers) include :

Any item of tangible moveable property (whose market value does not exceed £6,000) - subject to further conditions on use of property

Other exotic assets like vintage cars, wine, stamps and art

Residential property.

We hope this helps for more information please visit our website White Knight Associates: www.wk-associates.com