An introduction to SIPP

Find out all about SIPPs and their benefits with our quick questions

What does SIPP stand for?

SIPP is the abbreviation for a Self-Invested Personal Pension, a variation of a personal pension that offers wider control and more flexibility than other traditional options. 

It is a regulated pension scheme, giving members greater ability to influence how their pension pot is invested.

What makes a SIPP different to other pension options?

Whereas many pension options are tied to the investment funds of one company, a SIPP allows for a variety of permissible investments bundled into one tax-efficient wrapper.  

The options for investment are, in theory, wide ranging - although certain conditions with regards to the asset need to be met to avoid substantial tax charges on the member and the administrator of the pension scheme itself.

Residential property and taxable moveable property constitute two categories of asset which would fall foul of the tax charges; however, when it comes to SIPP, the big draw for clients is the ability to hold commercial property.

How can a SIPP unlock opportunities?

Business owners are often seeking to expand and grow their business although it is not always easy to seize on opportunities. There might be an opportunity to acquire another company, or to venture into a new market which could involve the purchase of new premises.

If the buyers have existing pensions, it maybe possible to unlock these funds and explore the possibility of using them to purchase the property. This would free up other company funds to be put to better use elsewhere.

Whilst the pension fund on its own may not have sufficient cash to cover the cost of the purchase in full, a SIPP can open up the ability to borrow from a high street bank to meet any shortfall, subject to 50% of the pension scheme’s net asset value.

As specialists in the area of providing advice on using a SIPP to purchase commercial property, we are happy to advise clients further on their individual circumstances.

Can I open a SIPP independently?

We would strongly recommend that anyone seeks expert assistance before making any financial decisions. In addition to a wealth of experience on the subject, we also have a network of trusted fellow business partners we can actively involve, ensuring our clients are receiving the best advice to grow their wealth in a tax-efficient manner. 

Get in touch to find out how a ​SIPP could work for you and look out for our future blogs on the subject.

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