What Are The Benefits Of A SIPP?

by Josh Biggs in Finance on 30th April 2020

If you are thinking about investing in a SIPP then you should know that it works in a very similar way to a personal pension. The only difference is that it gives you way more control and flexibility over your investment. There are so many advantages that you can gain from SIPP, some of them include the fact that you can control which investment vehicles you use and you can even earn returns according to your level of risk. A SIPP is also very tax-efficient, the government will match your savings and they can also give you some pension relief too.

Versatile Investment Vehicles

A SIPP can be a very versatile investment vehicle. They can hold a huge range of assets and your savings will grow along your investment as well. You can choose to carry on paying into your SIPP until you reach the age of 75 if you want. Another thing that you should know is that you are going to be guaranteed a 20% tax bonus and you will also be given a much higher rate as well. This means that you can enjoy a 25% tax deductible on your SIPP contributions. Other benefits of a SIPP include the fact that you are going to get flexible options for your payouts. If you are looking into your investment or pension then now may be a good time for you to look into QROPS too.

The Benefits

SIPP pensions will give you a huge amount of flexibility, and the best thing is that it is also very tax efficient as well. It’s a convenient way for you to try and protect yourself for the future and you can add to your savings whenever you want. As mentioned above, when you do this, the government will then top up your savings via pension relief. This will of course, be based on your marginal rate of tax. The great thing about this is that it gives you a maximum rate of freedom and it also lets you manage your very own investment and retirement fund. SIPP will restrict you from being able to withdraw your funds until you are the age of 55. In the year 2028, this will change to 57.

The great thing about this is that it is a completely safe pension savings tool as it means that you cannot access your funds until you are much later on in life. You can take up to 25% of the pot tax-free and the rest will be treated as if it is a taxable income. If you want to hold a property in SIPP then you will be able to take advantage of a very high capital growth. You will also get capital gain which results from an increase in the property value. Rental income will become tax-exempt as it will be reinvested in the SIPP. This means that you have so much potential, and that it is very easy for you to capitalise on any investment you make.

Categories: Finance