SIPP advice

chockydavid1983

Hi guys,

I am looking to start investing into a SIPP and was wondering if the process was the same as for investing in an S&S Isa? I.e.
Choose a platform and open a SIPP
Choose a fund that they offer and invest

I'm looking to invest about £100 per month and was thinking about the Vanguard Life Strategy 100 for now (currently 31, would reduce equity share later). AJ Bell You Invest seems like a decent option for my needs with low quarterly fee and low percentage on funds. Thoughts?

Thanks,
Chris.

xylophone

http://moneyweek.com/personal-finance/isas/stocks-shares-isa-providers-cost-comparison-table/

http://monevator.com/cheapest-pension-diy/

might be worth a look.

Kendall80

chockydavid1983 wrote: »

Hi guys,

I am looking to start investing into a SIPP and was wondering if the process was the same as for investing in an S&S Isa? I.e.
Choose a platform and open a SIPP
Choose a fund that they offer and invest

I'm looking to invest about £100 per month and was thinking about the Vanguard Life Strategy 100 for now (currently 31, would reduce equity share later). AJ Bell You Invest seems like a decent option for my needs with low quarterly fee and low percentage on funds. Thoughts?

Thanks,
Chris.

Bestinvest have a 0.3% fee, no extra management/opening charges and no fund dealing charges. If you wanted to venture into shares then its £7.50 a pop.


When I last went through the comparisons they worked out the cheapest for me up until a balance of 50k.

chockydavid1983

Thanks xylophone, those links are a lot clearer than the ones I was looking at.
In terms of the minimum investment per fund with Best Invest, if I was to invest in Vanguard Life Strategy 100, does that count as one fund for this purpose even though it's a fund of funds?

Thanks Kendall80, it does look like it's best for me too and will be for the foreseeable future.

Thanks,
Chris.

Kendall80

chockydavid1983 wrote: »

Thanks xylophone, those links are a lot clearer than the ones I was looking at.
In terms of the minimum investment per fund with Best Invest, if I was to invest in Vanguard Life Strategy 100, does that count as one fund for this purpose even though it's a fund of funds?

Thanks Kendall80, it does look like it's best for me too and will be for the foreseeable future.

Thanks,
Chris.

Yes it does count as one fund and I believe your £100 a month would be enough for the monthly investing option. Some funds are lower at £80.

chockydavid1983

Thanks for the clarification Kendall80.
One of the links xylophone posted mentions a £2,880 lump sum to set up the SIPP with Best Invest. That will be fine but I'm just trying to find where it says that on their website so I can check that it's still up to date.
Also, how do contributions to SIPPs work? Do I just pay into it from my after tax income and then tax relief is added on automatically?

Thanks,
Chris.

xylophone

I notice that the Monevator article refers to the Select SIPP whereas the latest information on the web site refers to the Best SIPP - I wonder has there been some tweaking of terms and conditions, perhaps since April?

There is a number you can ring if you have queries and you can also download a brochure

http://www.bestinvest.co.uk/investment-tools/free-investment-guides/what-is-a-sipp

With regard to pension tax relief

http://www.bestinvest.co.uk/sipps/tax-benefits-of-a-sipp

chockydavid1983

Thanks xylophone.
My tax relief question was more to do with at what point you pay into the SIPP as I was wondering whether you had to somehow inform HMRC that you wanted to pay x into a SIPP each month.
However, it occurred to me that the logistics of this wouldn't really work and that you just pay your income that has already been taxed into your SIPP and then you get tax relief on top, in effect reimbursing you on the income tax you've paid making it as if you paid in your pre-tax income.
Still pretty new to this and getting a feel for how it works :-).

Thanks for the link, I'll email best invest later to ask about minimum initial payment.

Thanks,
Chris.

BLB53

One other point - be sure to check for dealing fees for the monthly purchases. I know Charles Stanley Direct do not have such charges - platform fee is 0.25%.

Vanguard LS is an excellent choice imo. You may be interested in a recent article on diy investor uk
http://www.diyinvestoruk.blogspot.co.uk/2015/04/vanguard-lifestrategy-one-stop-solution.html

xylophone

You make a payment from your after tax income into the SIPP - the provider will claim tax relief at 20% - if you are a higher rate tax payer you claim the additional relief from HMRC.
See https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Suppose you earned £50,000 per annum.

If you wanted to make a contribution of £10,000 you would pay £8000 in to the SIPP and the provider would claim £2000 from HMRC.

As a 40% tax payer you could claim an additional £1523 from HMRC so that your contribution cost you only £6477.

chockydavid1983

Thanks BLB53. From what I've read, BestInvest doesn't charge for funds either and platform fee is 0.3%. I think the Charles Stanley 0.25% doesn't apply to SIPPs and is instead a fixed £120 per year fee (happy to be corrected if that's not the case though). Because of that I think my best option is to use BestInvest for my SIPP and Charles Stanley for my ISA (i'll invest in Vanguard Life Strategy 100 in both).

Thanks for the clarification xylophone. I may be a higher rate tax payer this year dependant on any pay increase/ bonus this year. Is claiming additional pensions tax relief something you do once a year as part of a self assessment tax return?

Thanks,
Chris.