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chevin

Sipps What Changed

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quote from the treasury: 'This action will ensure that tax relief is only given to those whose purpose in making the contribution is to provide themselves with a secure retirement income'

Call me thick but what has actually changed? Of course you can't buy a cheap holiday home, you never could. You could only ever buy something at a real approved value, that required a real approved rental agreement/ income that was used as a contribution to the pension fund, with the rental income and the hoped for appreciating value of the property and set within the limit of the maximum pension fund size. Once drawn, when retired, tax would be paid. Where's the tax advantage?

Have I got it wrong again?

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quote from the treasury: 'This action will ensure that tax relief is only given to those whose purpose in making the contribution is to provide themselves with a secure retirement income'

Call me thick but what has actually changed? Of course you can't buy a cheap holiday home, you never could. You could only ever buy something at a real approved value, that required a real approved rental agreement/ income that was used as a contribution to the pension fund, with the rental income and the hoped for appreciating value of the property and set within the limit of the maximum pension fund size. Once drawn, when retired, tax would be paid. Where's the tax advantage?

Have I got it wrong again?

If for example your fund had 200k in it, the fund could purchase a 200k property (or more expensive still had you taken out a mortgage, up to 50% of the fund value). You would have had tax relief on the 200k you put in your fund i.e. up to 40% relief. That's why it was decribed as "cheap holiday home"

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i understand that but the relief is given when the money is put into the fund not when the property is purchased. There are rules as to how much one can put into a pension fund based on salary and age, that haven't changed, as I understand it, with the introduction of Sipps.

Isn't what GB said merely a clarification?

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i understand that but the relief is given when the money is put into the fund not when the property is purchased. There are rules as to how much one can put into a pension fund based on salary and age, that haven't changed, as I understand it, with the introduction of Sipps.

Isn't what GB said merely a clarification?

With the introduction of SIPPs they have massively increased the amount of money you can put into a pension fund (any amount up to your full salary if it's less than 200K+).

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With the introduction of SIPPs they have massively increased the amount of money you can put into a pension fund (any amount up to your full salary if it's less than 200K+).

There is no "introduction of SIPPs" comig up. SIPPs have existed for many years -- all that's happening next year is that the rules are changing.

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Isn't what GB said merely a clarification?

No it's not - it's a complete change to the rules, before they even became effective. SIPP funds can no longer invest in property (and some other investments), without having an immediate 40% tax applied to them

Edited by Casual Observer

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where does it say property, if done correctly (with correct value and rental agreements and genuine provision for future pension) cannot be put into a SIPP? All I can see has changed is a clarification that holiday homes (no rent) will be taxed. i.e. holiday homes where ALL users pay rent including the owner, then no tax.

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Chevin,

I don't think that you can get much clearer than this - no residential property in SIPPS, other than diverse commercial vehicles or REITS (or similar).

5.63 A small part of the proposed simplification would allow all registered pension schemes to invest directly in residential property. To prevent the potential abuse of the simplification rules, where people could claim tax relief in relation to pension contributions

into Self Invested Personal Pensions (SIPPs) for the purpose of funding purchases of holiday and second homes for their or their family's personal use, from 6 April 2006 SIPPs and all other forms of self-directed pensions will be prohibited from obtaining tax advantages

when investing in residential property, and certain other assets such as fine wines. This action will ensure that tax relief is only given to those whose purpose in making the contribution is to provide themselves with a secure retirement income. However, the Government remains committed to encouraging investment in a range of assets as part of

pensions saving and is therefore minded to allow SIPPs to invest in genuinely diverse commercial vehicles that hold residential property, such as the proposed Real Estate Investment Trust model (detailed further in Chapter 3). The Government will not hesitate to take action if it becomes clear that people are trying to use collective vehicles to get around the rules for prohibited assets

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  • 301 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% +
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