Self Invested Personal Pension (SIPP)

A SIPP is a Self Invested Personal Pension. Unlike managed funds, it lets you choose where your pension funds are invested.

Tax Savings within the KRM SIPP
You obtain full tax relief, at your highest rate, on anything you pay into your SIPP. Rental income from commercial property will be free of income tax and, when it is sold, increase in the property value will not be subject to Capital Gains Tax. Additionally, pension funds can be left to your dependants.

Borrowing within the KRM SIPP
SIPPs can borrow money and, just like a normal mortgage, interest is charged at the current commercial rate. Your KRM SIPP can borrow up to half the fund value it already holds. If, for instance, after transfers and lump sums, there is £200,000 in your SIPP, it could borrow £100,000, giving £300,000 for self investment.
Interest payments would usually be covered by the rental income of the assets. Alternatively you can pay into the SIPP to meet this charge and there is full tax relief on this payment.

When should I start a KRM SIPP?
New funding rules come into effect in April 2006. However, there are four
main advantages to starting your KRM SIPP before then:
1. To buy commercial property or select your own equity portfolio.
2. To start building up funds within your KRM SIPP. Lump sums can be paid into the SIPP now. Transferring-in pension funds can take some time so it’s advisable to start early to allow time for the necessary administrative process.
3. Charges in the SIPP may be lower than in other pensions so starting a KRM SIPP now may be cheaper than waiting until April 2006.
4. Moving all of your pension funds into one can be administratively simpler.

How do I fund my City Financial SIPP?
› Transfer-in existing pensions, and use the funds for self investment.
› Pay money into your KRM SIPP and obtain full tax relief.
› Until April 2006, funding rules are the same as for Personal Pensions.
› It is vital to pay in lump sums now and use your allowances before April 2006.
› From April 2006, funding rules change and new limits are normally higher.

Do your parents want to shelter you from Inheritance Tax by giving you their house?
Putting it into your KRM SIPP should be considered.

Are you approaching retirement?
Putting money into your KRM SIPP attracts full tax relief and takes the money outwith your estate. ‘Family SIPPs’ can be set up so that assets can be passed on free of Inheritance Tax.

How do you decide if a SIPP is right for you?
Like most financial planning, SIPPs are best discussed with an expert independent financial adviser. So the next step is to meet or talk with us and we will answer your detailed questions. The more information you give us, the easier it will be to advise you. Then you can make an informed decision as to whether a SIPP is right for you.

What should you do now:
› Start a KRM SIPP so that it is in place and ready to self-invest in April 2006.
› Ask your Employer to talk to us about setting up a Group SIPP.
› Transfer existing pension funds into your KRM SIPP.
› Start paying into your SIPP.
› Buy equities and commercial properties now, if applicable.
› If you have an old style SIPP, convert it into a new, flexible SIPP.