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

A SIPP is a type of personal pension scheme that gives individuals greater control over their pension investments. It allows you to choose and manage a wide range of investments, including commercial properties and buy-to-let properties.

Property Purchase: With a SIPP, you can use your pension funds to purchase commercial properties or buy-to-let properties. The property will be owned by your SIPP rather than you personally.

Tax Advantages: By using a SIPP to invest in property, you can benefit from various tax advantages. These include:

1. Tax Relief: Contributions made to a SIPP are usually eligible for tax relief, meaning you can receive tax relief on the amount you contribute.
2. Rental Income: Any rental income generated from the property within the SIPP is generally tax-free. This can help to boost your retirement savings.
3. Capital Gains Tax (CGT): If the property held within the SIPP is sold at a profit, any capital gains realised are typically exempt from CGT. This allows you to potentially grow your pension fund without incurring additional tax liabilities.

Retirement Income: When you reach the age of retirement, you can choose to draw an income from your SIPP. This can be done through various methods, such as purchasing an annuity or using drawdown facilities. The rental income generated from the property within the SIPP can contribute to your retirement income.

It’s important to note that investing in property through a SIPP involves certain rules and regulations set by the government and regulatory bodies. It is advisable to consult with a financial advisor or pension specialist who can provide personalised guidance based on your specific circumstances and help you navigate the process effectively.

Finspire Finance Limited is not authorised and regulated to provide specific advice on tax planning although we can introduce you to suitably authorised entities should you so wish.