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Why should my client consider a SIPP?

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A SIPP (Self-Invested Personal Pension) allows individuals to make their own investment decisions. Similar to a standard personal pension a SIPP is a pension 'wrapper' that allows for access to a wider range of HMRC approved investments.

The Yorsipp SIPP is designed to:

  • allow you to save for your retirement in a tax efficient manner,
  • provide you with flexible pension benefits when you retire,
  • enable you to make decisions with your financial adviser as to how you would like your pension savings to be invested,
  • allow you to make transfer payments from other appropriate pension arrangements.

Transferring commercial property into a SIPP or SSAS can be a smart business move as the following example shows:

  1. Purchase – Mr Smith’s business owns a café with a commercial valuation of £100k.
  2. SIPP – He opens a SIPP and uses the funds in his SIPP to purchase the café from his business. The SIPP now owns the property and Mr Smith’s business is the tenant.
  3. Rent – The surveyor calculates the rent of the café at £10k per annum, and this then gets paid by the member’s business as the tenant into the trustee account.
  4. Sale – 10 years later Mr Smith instructs Yorsipp to sell the property as property prices have risen well and he stands to makes a profit which comes back to the SIPP.
  5. Tax efficient – Any rent paid into the SIPP is usually free from income tax and the rent can be invested into an investment portfolio. Any growth on the property value is usually free of Capital Gains Tax.

(The final value of your SIPP is not guaranteed and will depend on a number of factors including, payments received, duration of investment, charges paid and the performance of your chosen investments.)

If your client or your client’s business owns a commercial property then transferring their property into a SIPP can be very beneficial.

The figures are indicative only and do not fully take into account Yorsipp’s fees, any adviser charges that may be due and the legal fees and disbursements it will cost to acquire part of the property or eventually the full property.

Yorsipp are authorised and regulated by the Financial Conduct Authority under reference 464198 but are not authorised or regulated to provide financial advice. The above guide is intended for use by financial advisers only and is based on a simplified case scenario and should not be construed as being indicative of a specific case or clients’ circumstances. Yorsipp will only accept new SIPP applications from a suitably qualified financial adviser. Consideration will also need to be given for legal fees/disbursements, Yorsipp’s fees, any adviser fees and any other costs associated with the property.

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