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flash harry

Sips - A Few More Questions?

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Sips

Few more questions if anybody can help:

Would the tax discount be availble to all higher rate tax payers i.e. even those who just earn over the threshold (pay approx £32,000)

Will enough money move in to the BTL market to perpetuate the bubble?

If the bubble is falsely maintanted by Sips what economic and social effects will it have?

Are Sips designed to maintain the bubble long enough to keep Labour in?

Any help appreciated?

FH

Edited by flash harry

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Sips

Few more questions if anybody can help:

Would the tax discount be availble to all higher rate tax payers i.e. even those who just earn over the threshold (pay approx £32,000)

Will enough money move in to the BTL market to perpetuate the bubble?

If the bubble is falsely maintanted by Sips what economic and social effects will it have?

Are Sips designed to maintain the bubble long enough to keep Labour in?

Any help appreciated?

FH

Money has to come from somewhere, its not simply magiced out of the air, if more dosh starts flowing into SIPPS then equity markets will suffer, company profits will fall, unemployment will rise, rent returns will fall , which in turn will hit yields and capital growth on SIPP investors.

The trick with every money make scam is to hit the market at the peak then do a runner just as the shoe shine investors arrive. The smart money will be collecting the commission on sales and managenment fees while the muppets risk everything.

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To make it simple , a sipp is merely a DIY pension.

option 1. You pay into a company pension , the pension provider a la A/dunbar , N/union or whoever, looks after your money until you retire. You get tax relief at either 22% or 40% during that time and pay income tax on the proceeds of an annuity.

option 2. You pay into a private pension , the pension provider a la A/dunbar , N/union or whoever ,looks after your money until you retire. You get tax relief at either 22% or 40% during that time and pay income tax on the proceeds of an annuity.

option 3. You pay money into a sipp , which is merely a holding station for your contributions and they claim your relief. You get tax relief at either 22% or 40% during that time and pay income tax on the proceeds of an annuity. The only difference is that rather than A/dunbar , N/union or whoever looking after your money , YOU DO. YOU get to do the buying/selling of shares , cash vehicles , bonds , gold etc etc.

As from next year 'apparently' you'll be able to buy residential property within the sipp , thats it .

Hope that explains it .

D

:)

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One way or another next april is going to be a very interesting time. I believe the Sipp effect has already been factored into the market price to some degree. If it is just a damp squib as many here are forecasting then it could bring on some juicy falls next summer. However it may well cause a spike as many climb on board. To me it seems the only people who are really going to benifit from this are those earning 150k plus as they will be able to set aside a large amount of 40% taxed income (in one year) against the initial house purchase. So the average hard working Joe on say 40k is not going to reap any significant benifits above what they woould get in a normal pension provision. Dont forget you have to pay tax on the money when it leaves the SIPP.

My prediction is this- sipps go ahead with property included

The rich get richer (well they deserve it)

A mini spike at the lower end of the market say +3% then stagnation

My hope is this - property is excluded

sipp factor in the current market falls away = HPC

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I'm reposting this from another thread, as we seem to have several SIPPs related ones running and this seems the place to sort out how it works.

The Times is saying in a number of articles that:

A higher-rate taxpayer buying a £100,000 property through the scheme would receive a £23,000 rebate and a further £28,000 into the SIPP, making a total of £51,000 in tax breaks on the purchase.

Can anyone make these figures stack up – even roughly in round numbers? :unsure:

I'm still trying to understand these SIPPS but can't even make the basic figures work ... always end up with, per 100k SIPP assets - 78k contribution, 22k tax refund into SIPP (total 100=78+22), personal tax refund 18k, hence cost per 100k asset is 78-18 = 60k.

EDIT: rebate is 40p per 100p SIPP asset, as expected

This SIPPS Guide seems quite good

http://www.trustnet.com/help/sipp/?print=y

but then I can't quite make their example (taxation paragraph) work either ...

per 1000k SIPP, 780k contribution, 220k refund into SIPP (yes!), but (180k=them, 300k=me) personal refund.

EDIT: the 180k above is correct based on IR3 tax guide. So the Times figure of a 51p rebate per 100p in the SIPP is looking dodgy.

Edited by spline

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TYou get tax relief at either 22% or 40% during that time and pay income tax on the proceeds of an annuity. The only difference is that rather than A/dunbar , N/union or whoever looking after your money , YOU DO. YOU get to do the buying/selling of shares , cash vehicles , bonds , gold etc etc.

As from next year 'apparently' you'll be able to buy residential property within the sipp , thats it .

I'm afraid that's wrong. You don't have to buy an annuity with the fund. If for example the SIPP owned some BTLs you could just live off the income. As I understand it there may well be the possibility of setting up a family SIPP which you can pass down to your children.

As for the general pros and cons of this extraordinary scheme, if you put in £100k you get a £20k or thereabouts contribution from other taxpayers into the SIPP itself, plus a similar sized rebate to you in cash. So the SIPP ends up with about £128k despite an input from you of only about £100k - £23k = £77k. So if you were to use that £128k to buy a property you would be getting it at a massive discount. If that property fell in value by say 30% you would still have got it on the cheap.

You can see why people are interested in it.

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You don't have to buy an annuity with the fund

Technically, no, but there are still strict limits on the amount of income you can take from the SIPP, effectively making it similar to an annuity, but with more flexibility than the previous system (which is not saying a lot):

http://www.telegraph.co.uk/money/main.jhtm...09/cmsipp09.xml

After A-Day, people under 75 will be able to choose to take no income from their funds or, alternatively, to take up to 120 per cent of the income they could get from an equivalent annuity for their age. More significantly, the over-75s will be able to continue drawing income from their pension plans rather than having to purchase an annuity. However, they will have to use a restricted form of drawdown, an Alternatively Secured Pension (ASP). They will not be forced to take an income from the fund, and the maximum income will be just 70 per cent of the prevailing annuity rate. The downside is that the maximum income remains linked to the age-75 annuity rate no matter how old you are.

---------------------------------------------------------------------------------------------------------------------

there may well be the possibility of setting up a family SIPP which you can pass down to your children.

Yes, but this will incur Inheritance Tax if it is over the threshold, just like any other inheritance, so what's the point?

http://www.telegraph.co.uk/money/main.jhtm...cmpension30.xml

Family Sipps

Last week, the Government signalled it would close down a loophole in the current proposed regulations that would have allowed pensioners to transfer their property to children through a "family Sipp" without incurring inheritance tax.

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Now the Scotsman is repeating this example

http://news.scotsman.com/uk.cfm?id=2020762005

A higher-rate tax payer buying a £100,000 property through a SIPP would receive a £23,000 refund personally and an additional £28,000 refund into the SIPP, making a total rebate of £51,000.

There is no consistency at all in the various examples on the web, and the same stuff just gets repeated over and over ... :angry:

Edit: are these numbers wrong? Or just very clever.

Edited by spline

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I'm afraid that's wrong. You don't have to buy an annuity with the fund. If for example the SIPP owned some BTLs you could just live off the income. As I understand it there may well be the possibility of setting up a family SIPP which you can pass down to your children.

As for the general pros and cons of this extraordinary scheme, if you put in £100k you get a £20k or thereabouts contribution from other taxpayers into the SIPP itself, plus a similar sized rebate to you in cash. So the SIPP ends up with about £128k despite an input from you of only about £100k - £23k = £77k. So if you were to use that £128k to buy a property you would be getting it at a massive discount. If that property fell in value by say 30% you would still have got it on the cheap.

You can see why people are interested in it.

Do you think labour would ever exclude properties before the scheme is released

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I'm afraid that's wrong. You don't have to buy an annuity with the fund. If for example the SIPP owned some BTLs you could just live off the income. As I understand it there may well be the possibility of setting up a family SIPP which you can pass down to your children.

As for the general pros and cons of this extraordinary scheme, if you put in £100k you get a £20k or thereabouts contribution from other taxpayers into the SIPP itself, plus a similar sized rebate to you in cash. So the SIPP ends up with about £128k despite an input from you of only about £100k - £23k = £77k. So if you were to use that £128k to buy a property you would be getting it at a massive discount. If that property fell in value by say 30% you would still have got it on the cheap.

You can see why people are interested in it.

Are you talking about drawdown?

I certainly bow to your better judgement if htis the case as I'm no expert , I was merely pointing out the 'basic' operation of pensions. Drawdown is what I'll be looking into myself over the next few years as regards my current sipp , whilst hoping that in the mean time the annuity situation will be changed at some poiint in the future.

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A few years ago a family could by a flat for there son or daughter whilst they were at university. 3 years later they could sell that flat at a healthy profit.

Now to the present day say the scenario were to happen, a wealthy family were to invest £100000 for a flat through SIPPs whilst there son/daugter were at univisity. 3 years later they decide to sell the flat.

The question is, if the market value of the flat was now 20% less (£80000) due to the HPC, would the family recieve -

a) the full £80000

B) part of it £80000

c) the flat cannot be sold

:blink:

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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