Q: I am 50 years old. Could you please tell me how much
I can contribute to a Sipp?
Mr. S. Stephens,
Oxford
A: At age 50, you can
contribute up to 25% of your earned income, or as it is called in
revenue jargon, your net relevant earnings. From age 51-55 this
increases to 30% and increases further as you grow older.
Q: Can I put a property into a Sipp which I already own,
and are there any penalties if I do?
Mr. R. Tweedy,
Manchester
A: Property which
you already own and use yourself can be placed into your Sipp, but
unfortunately, there are penalties. You must either pay a full
market rental or a benefit-in-kind tax at 40 p.c.
Other existing property which you transfer into your Sipp will
have to be purchased by your Sipp at a fair market value which
could incur Capital gains tax (except if it is your main residence)
and also Stamp duty.
Q: Is it true that I could invest a boat into my Sipp as
an asset?
Mr. R. Jacobs, Poole
A: Yes, but there are, as you would
expect , some catches, certain classes of asset, such as boats,
wines, race horses and stamp collections are deemed to be ‘wasting
assets’, ones which are seen to possibly decline in value over time
or have a useful life of less than 50 years. If you or your family
make personal use of an asset, you must determine the market ‘rent’
payable, which could be 20% of the original purchase cost.
Alternatively, you can pay a benefit-in-kind tax, charged at 40p.c.
of the market ‘rent’ plus, for ‘wasting assets’, a further 15% tax.
So proceed with great caution and take independent specialist
advice.
Q: I already have a pension but am interested in taking
out a Sipp – can I transfer my existing pension to the new
Sipp?
Mr. K. Roberts,
Newcastle
A: Yes – In
principle, you can transfer your existing pension but do check
whether your existing pension provider will charge you a penalty or
whether you may loose valuable guarantees.