A SIPP can be started by an individual or by an
employer. To start up a SIPP, you will need to approach an HMRC-approved
provider. These include insurance companies, pensions
consultants and fund managers, among others.
Depending on the type of provider, the plan will involve at
least a scheme provider and a scheme administrator (which may be
the same organisation). If the SIPP is trust-based, and you
are not going to be the trustee, the provider or another specialist
must act as trustee.
A SIPP can be started from scratch or by transferring funds from
another plan.
Q & A's
No, but the larger the fund, the greater the investment
opportunities. Also charges levied by providers are often subject
to a minimum flat rate amount, which can mean that very small
contributions are not viable.
However, the SIPP market has become very competitive and there
are some providers whose charges are geared to attracting the
smaller investor.
If you want to use your SIPP to invest in property, the SIPP
must have sufficient funds to buy the property (either outright or
with a mortgage). A SIPP is restricted in the amount it can
borrow.
In order to qualify for the tax relief from the Revenue, an
authorised provider must be used.
The maximum contribution that attracts tax relief for someone
with earnings is the lower of £255,000 and 100% of earnings
in each tax year. Contributions above 100% of earnings can be made
but no tax relief is available on the excess. A tax charge will be
imposed on any contributions over £255,000 in a tax year.
If you do not have any earnings, the maximum tax relievable
contribution is £3,600 (gross) in any tax year.
Contributions by individuals are paid net of basic rate tax;
contributions by employers are paid gross.
