Cheapest Sipp: build yourself a low cost DIY pension article

harryhound

NeilW wrote: »

That's a little bit of a skewed view isn't it.

- Or you can leave the pot there untouched and growing tax free until your 75 if you want.

Up until the point that you take your pension there is a handy built in advantage. If you drop dead the entire fund goes to your beneficiaries *tax free* as a lump sum.


figures.

Hi NeilW,

I think I've read this right, I'm only 60 and senile demential is not yet self evident ?

If I build up (or transfer in) a SIPP pension pot and then pop my clogs before I have started taking a pension and before I've reached 75, the tax free money comes out again tax free - free of income tax, capital gains tax and INHERITANCE TAX ?
Presumably I have to fill in some sort of nomination form so the SIPP provider knows to whom to pay out ?

(Don't tell my relatives - they might be tempted to take me out for a pre-birthday celebration and put a powder in my drink ?!)

Regards,

Harry.

PS Do you remember the days when wills were still kept at Somerset house ?
Well one day I was climbing the couple of steps, ready to pull open the front door, with its polished brass handle; when it burst open towards me.
Hurtling through the door came a female looking backwards and speaking to two males. She was self evidently in charge and they could have been her brothers.
Just before she thudded into me she issued the immortal words: "Would you believe it; the crafty old b a s t a r d .............".

dunstonh

If I build up (or transfer in) a SIPP pension pot and then pop my clogs before I have started taking a pension and before I've reached 75, the tax free money comes out again tax free - free of income tax, capital gains tax and INHERITANCE TAX ?

Not just sipps but personal pensions and stakeholders as well. Retirement annuity contracts should now be the same but its worth checking as some only give back premiums paid plus interest.

Presumably I have to fill in some sort of nomination form so the SIPP provider knows to whom to pay out ?

Its usually best to.

averageguy11

EDINVESTOR..as far as i know..u cant transfer protected rights into a sipp anyway...as regards to sippdeal..ther website confirms that

MickKnipfler

I'll be 48 in June. Being now self employed via a Ltd Co, I'm seriously considering a SIPP.

I worked 30yrs for BT and have a corporate final salary pension which being index linked will pay out equivelant of £18k per year from age 60.

I have 2 questions:

1) Where is the best SIPP deal if I want to invest in a mixture of FTSE and AIM listed stocks
2) Is it correct that my company can pay into the SIPP free of Corp tax/NI, at age 55, I can then take out 25% of the fund value tax free, the balance can then be withdrawn under PAYE equivilant taxation, on death, the balance is willable and isn't subject to IHT?

EdInvestor

.u cant transfer protected rights into a sipp

That's correct at the moment, but this should change fairly soon.

) Where is the best SIPP deal if I want to invest in a mixture of FTSE and AIM listed stocks

I would suggest Sippdealextra with Selftrade as the broker.

2) Is it correct that my company can pay into the SIPP free of Corp tax/NI, at age 55, I can then take out 25% of the fund value tax free, the balance can then be withdrawn under PAYE equivilant taxation, on death, the balance is willable and isn't subject to IHT?

A SIPP is just a type of personal pension - the only different is the wider investment range.

At 50 (55 later) you can take benefits from ("vest") a pension, taking 25% in tax free cash.The rest of the fund can either be converted into a taxable annuity, left to grow with no income being taken, or left to grow while taking a taxable income (a higher level is permitted than what you get with an annuity).This latter procedure is called income drawdown.

Any pension that has not been "vested" can be paid in full to beneficiaries on death under 75.Any fund in income drawdown can be paid up to age 75 in cash to beneficiaries on death minus a 35% tax charge.

After 75 complex rules apply.There is no capital left with an annuitised pension. Pensions are not in your estate and thus do not attract IHT on death before 75.After 75 the drawdown fund (now known as an ASP) can be handed onto a spouse or dependant but will incur 82% tax (incl IHT) if left to beneficiaries. In the long term this might change, but the Government is quite adamant about disallowing inheritance of tax free pensions for the time being.

h2oec

Hello,

I'm interested in share dealing UK and International Stocks. Can you please advice the cheapest SIPP available that has the following:

1. Allow share dealing UK/International (US + Europe)
2. No yearly management fees
3. Reasonable if not cheapest share dealing charges
4. Reasonable if not cheapest transfer in/set up charges

I have around 30K in pension funds I'd like transferred as cash.

Appreciate your help and suggestions!

H2oec

EdInvestor

Try https://www.Sippdeal.co.uk

sippycol

The charges appear cheap relative to Hargreaves/Lansdown and TDWaterhouse but don't die while you are with them.

Descriptions of charges as "Time Cost Basis" can mean horrendous bills. Hundreds of pounds per hour with a time limit need only be reasonable. So unfortuneately they set the hourly rate and the number of hours.

Not for the unhealthy

EdInvestor

Have you asked them for an estimate of what they might charge or do you know someone who had to pay a lot? If the spouse continued with the SIPP as is, then there would be little work to be done, and if s/he opts to take the fund net of the tax charge,that too wouldn't seem likely to generate more work than,say, drawdown setup and paying out tax free cash, neither of which are very expensive at Sippdeal.

sippycol

You are right it could be cheap or it could be very expensive. I have not asked them but from past experience with 'Time Cost Basis' I have never known it to be cheap.

If other sipp provider can specify a cost why cann't Sippdeal?