Where to put £100k to beat inflation

microstar

"The same £ contributed is worth about 6.25% more in a SIPP than in an ISA......"

Why is that?

colsten

kidmugsy wrote: »

I don't see why. The same £ contributed is worth about 6.25% more in a SIPP than in an ISA, plus various other advantages such as being tax-free for your nominated successor if you die before age 75.

If a SIPP is so compelling (which I am not convinced about if the tax rate at the time of investment isn't higher than at time of withdrawal), it doesn't have to be at the exclusion of an ISA. For starters, it would take 30+ years to feed £100K into a SIPP, versus 5 into an ISA which won't be taxed in the future.

colsten

microstar wrote: »

"The same £ contributed is worth about 6.25% more in a SIPP than in an ISA......"

Why is that?

Because in a SIPP, you pay in £2,880 (the max allowed when you are no longer employed), and you get £720 added by the HMRC.

When you start drawing on your SIPP, you can get 25% of it tax free, and you pay tax on the rest at the prevailing rate, which looks like Basic Rate for you, from the figures you have given.

You don't get an upfront bonus for your ISA but all the ISA money will be tax free when you withdraw it.

Vortigern

colsten wrote: »

Because in a SIPP, you pay in £2,880 (the max allowed when you are no longer employed), and you get £720 added by the HMRC.

True, but the OP has been employed during the current tax year, so could possibly make a much larger contribution to a SIPP for this year only, and make a larger dent in the lump sum.

george4064

Perhaps take a look at investing in capital preservation trusts to be held in a S&S ISA?

Few names that pop to my head include:

- Ruffer Investment Company
- Personal Assets Trust