Newsflash!

Budget March 2012

The Economy

The Independent Office for Budget Responsibility (OBR) has revised upwards the UK forecast for 2012 from 0.7% to 0.8%.   The forecast for 2013 is 2%, for 2014 2.7% and for 2015/16 3%.   UK inflation is set to fall from 2.8% for 2012 to 1.9% for 2013.

Pensions

WEF April 2013 a new single-tier state pension will be introduced to be set above the means test at a minimum of £140 a week.   The Government is due to examine linking the state pensions age to life expectancy.

Child Benefit

This will be phased out when someone in a household has an income of more than £50,000, decreasing by 1% for every £100 earned over £50,000.   Only those earning more than £60,000 will lose the benefit completely.

Tax

WEF 21 March 2012

  • there is a new 7% stamp duty on properties worth more than £2m
  • there are also plans (15% stamp duty rate on properties worth over £2m within corporate envelopes) to clamp down on stamp duty avoidance by using companies to buy expensive properties.

WEF April 2013

  • the 50p top rate of tax levied on earnings of £150,000 or more will be cut to 45p
  • the personal income tax allowance will be increased to £9,205
  • age-related income tax allowances will be removed for new pensioners and replaced with the same personal allowance as the rest of the UK
  • there will be a new cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year
  • Corporation tax will be reduced to 24%, with a further 1% reduction in 2013 and in 2014.

There will also be a simplified tax return process for small firms with a turnover of up to £77,000.

WEF April 2013/14

  • the higher income tax band will be reduced from £42,475 to £41,450.

 

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The Essentials of a SIPP

Monday, 06 April 2009 11:28
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A Self Invested Personal Pension (SIPP) offers you more control over your pension pot than a conventional personal pension where the investment company restricts your choice of investments it manages.   Accumulated Protected Rights funds can now be placed into a SIPP.

Is a SIPP for you?

A SIPP will give you:

  • a wide investment choice, including stocks and shares, bonds, cash, commercial property, hedge funds and private equity;  you can even invest in your own business by using a SIPP to buy commercial premises, whilst borrowing up to half of the purchase price
  • control of your pension pot
  • tax relief (see below)
  • internet access giving real time valuations and the facility to manage your pension online
  • low costs and charges for small sized funds;  the more sophisticated your SIPP and the wider the range of investments selected, the more it will cost to set up and administer;  charges include:  set up fee (some SIPPs do not make this charge), annual management fee, dealing chaarge, transfer fee.

A SIPP is for you if you are comfortable managing your own investment portfolio and selecting your own shares and funds.   If you already have adequate pension provision through an occupational plan, a SIPP is probably not for you.

Running a SIPP alongside a more traditional pension or company scheme may also be worth considering.

Who can have a SIPP?

Since 6 April 2006, the eligibility rules have changed so that any individual aged 75 and under (including children) and resident for tax purposes in the UK is eligible to take out a SIPP or transfer another pension into one.   You can now pay into an occupational and personal pension at the same time.

How much can I put into a SIPP?

There are limits to the amount you can save and receive in tax relief.

  • Earners:  you can contribute 100% of your annual earnings with full tax relief on the total, subject to a maximum earnnigs limit of £245,000 in 2009/10 (rising to £255,000 in 2010);  you can invest more but without tax relief.
  • Non Earners:  you can contribute up to £3,600 per tax year and still receive basic rate tax relief;   non earners can pay in £2,880 per tax year to which the Inland Revenue will add £720.

In addition, your employer can contribute as part of your salary and you can transfer existing pensions or other assets (e.g. shares from a company share scheme) into your SIPP.   For pension transfers, though, beware of complicated exit penalties from your existing scheme.

All investments should be held for the long term as their value can fall as well as rise and therefore you could get back less than you invested.   Capital values and income are not guaranteed and past performance is not a guide to the future.   Information in this article is based on CFM's current understanding of taxation rules and regulations and these are subject to change by the government.   The exact tax relief you are entitled to will depend on your own personal circumstances.

Whilst this information gives you a brief overview of the SIPP market, it should not be read as a recommendation as it does not take into account your individual circumstances and attitudes.   Before you proceed, do Contact Us to discuss your personal needs and circumstances.

If you would like to find out about an investment which blends a mixture of personal pension and SIPP characteristics, visit Scottish Widows Retirement Account.

Last Updated on Tuesday, 10 November 2009 14:13