Types of Penisons

Self-Invested Personal Pension (SIPP)

What is a Self-Invested Personal Pension? (SIPP)

The self-invested personal pension (SIPP) is a form of individual personal pension plan offered by specialist providers. Although subject to the same rules as personal pensions, the SIPP allows the planholder a wider range of investments than that offered by most providers. The investments include:

Self-Invested Personal Pension
  • • Unit trusts and OEIC’s
  • • Commercial property and residential elements linked to it for the purpose of the business – caretaker’s flat, etc
  • • Insurance funds
  • • Cash
  • • Current deports
  • • Futures and options

The range of investments includes commercial property, which means that sole traders and partners can use their SIPPs to buy their business property, with the SIPP trustees becoming the legal owners of the property. In the case of a partnership, each partner would arrange a SIPP and use it to acquire a defined share of the property. In addition to using the SIPP assets to buy the property, the SIPP can also borrow an amount up to 50 per cent of the fund value. For example, if Ann’s SIPP had a current value of £100,000, she could borrow a further £50,000, giving her £150,000 to purchase a property. Borrowing will be subject to the normal criteria of the lender. The business must pay a market rent to use the property.

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