Sipp

Self Invested Personal Pension

Landlords across the UK are beginning to wise up to the tax saving potential offered by buying residential property within a Sipp.

As of April 6th, 2006, new regulations will mean:

Buy-to-let property bought in a Sipp 2006 is free from capital gains tax
Rental income is free from income tax

There are currently around 131,000 Sipp plans, but this is expected to rise to over 500,000 with the introduction of Sipp 2006 rules.

What is a Sipp?

A Sipp is, fundamentally, a personal pension. As with all pensions, its purpose is to provide the investor with a tax efficient means of building funds to secure a good retirement income.

Offering choice and flexibility, a Sipp allows the investor to directly control their funds.

Self Invested Pension Plans were given the go-ahead by Nigel Lawson in his 1989 Budget Speech.

"I propose to make it easier for people in personal pensions to manage their own investments" – Nigel Lawson

How can 2006 Sipp changes assist me?

A recent survey by buy-to-let lender Mortgage Trust showed that 70 per cent of respondents would contemplate putting at least one property into a Sipp (Self Invested Pension Plan) in light of these rule changes.

The increase in interest in investment property as a result of these changes highlights the rising importance of the 2006 Sipp market to buy-to-let investors.

James Hay, a UK Sipps provider, believes that existing buy-to-let investors with cash tied up in traditional pensions schemes, would make up a large percentage of customers keen to transfer their property into a Sipp, thus gaining access to their money.

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