Commercial Property SIPP Investment Seminars
The changes in pension regulations post April 2006 will have a
significant effect on the property investment market place and will
undoubtedly prove to be an extremely tax efficient way of investing
in property.
McEwan Fraser host regular commercial property SIPP Investment
Seminars co-hosted by a number of our strategic business partners,
each
of whom has
a
critical part to play in SIPP Investments. These partners include
Coggans Wood, Edinburgh Wealth Management, both F.S.A. regulated,
Clydesdale Bank, Warners WS, The Royal Bank of Scotland and VMH
Solicitors. The seminars are held in our Edinburgh premises at
a cost of £195
per person with the price including a light buffet and refreshments.
Dates and availability for these seminars are held at our offices.
The main attractions of a commercial property self invested personal
pension are:
-
No more income tax on your rental income
-
No capital gains tax when you sell your property
-
You can buy property at up to a 40% discount
-
Cut your income tax on your salary to zero
-
The
opportunity to have a tenant for many years
-
Normally full
repairing and insuring leases
- Guaranteed rent increases (depending upon lease)
If you are interested in finding out more and/or attending one
of these seminars, then please feel free to contact us at:
Email: info@mcewanfraser.co.uk
Office Tel. No. 0131 523 1540
Please note: The above advantages are per current pension
legislation and may change in the future.
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The Pension Calculator
The link underneath offers visitors a chance to
calculate what their pension will be worth if you invest your money
in equities (stock market, investment trust etc.) rather than property.
The Pension Calculator is an excellent method to demonstrate to
investors why property may be a much better investment vehicle than
traditional equity based investments.
Please note: McEwan Fraser are not authorised
to provide advice on pensions and only advise on property related
matters. See our partners page for authorised F.S.A. advisers.
Link: http://www.pensioncalculator.org.uk/pages/calculator1a.php?Submit=I+accept
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Glossary of pension terms
A - Day
April 6th 2006, the date residential property will be allowed as
a pension investment. Other important pension changes, such as more
generous contribution limits, will also be introduced from this
date.
Additional Voluntary Contributions
Top-up pensions that allow members of occupational pension schemes
to make additional pension contributions.
Alternatively Secured Income
The new and more flexible type of pension income that will be allowed
as an alternative to buying an annuity when you reach age 75. Available
to members of all pension schemes.
Annuity
An income purchased by investing a lump sum with an insurance company.
The two main types are compulsory annuities and purchased annuities
(see below).
Basic-rate relief
The tax relief paid straight into your pension pot by Inland
Revenue. Calculated using the 22% basic rate of income tax. For
example, if your contribution is £100 your gross contribution
will be:
£100/0.78 = £128.21,
with £28.81 paid direct to your pension provider
by the taxman.
Capital Gains Tax Exemption
Currently £8,200 per person, this is the amount allowed as
a tax deduction from your profits from selling property, after deducting
taper relief.
Compulsory Annuity
The pension for life that has to be bought with three quarters of
your pension savings when you reach age 75. The amount you earn
will depend on your age, sex and the level of interest rates. This
type of income is fully taxed.
Defined Benefit Scheme
Also known as a final salary pension scheme, your pension is dependent
on your years of service and your final salary. For example, you
may be entitled to 1/60th of your salary for each year you've worked
for the company.
Defined Contribution Scheme
Also known as money purchase pension schemes, your employer promises
to pay a 'defined contribution', eg 5% of your salary, into your
pension fund. Your final pension then depends on how the pension
fund's investments perform.
Higher-rate Tax
Currently 40%, it applies to all your income over £36,145.
Higher-rate Relief
The tax relief for contributions to pension schemes by
higher-rate taxpayers. Claimed when you submit your tax return and
calculated by multiplying your gross pension contribution by 18%.
For example, let's say you contribute £100 to a pension plan.
Your higher-rate tax relief is calculated as follows:
£100/0.78 = £128.211 x 18% = £23.08
Income Drawdown
The more flexible type of pension income that members of certain
types of pension schemes, such as SIPPs, can take before reaching
the age of 75. After A-Day income drawdown will become even more
flexible.
Money Purchase Pension Scheme
See defined contribution pension schemes.
Occupational Pension Scheme
Company pension schemes, usually structured as final salary schemes
but increasingly as money purchase schemes.
Personal Allowance
The first £4,745 of your income that is completely tax free.
Pension Transfer
The transfer of money from one pension scheme to another, eg from
an old occupational scheme to a self-invested personal pension.
Property Investment Funds
Also known as PIFs, these are the new residential property investment
vehicles that were announced in the 2004 Budget. They are to property
what unit trusts and investment trusts are to shares. In other words,
they will allow you to own a share in a big portfolio of residential
and commercial property for a small outlay. Should be attractive
for investors looking to maximize their income.
Purchased Annuity
The type of pension for life that anyone with a lump sum can acquire.
Similar to compulsory annuities except you only pay tax on the interest
portion of each annuity payment; the capital portion is completely
tax free. Useful for people who need to maximize their retirement
income.
Self-invested Personal Pension
Also known as SIPPs, they're very similar to other personal
pension schemes except they allow greater investment flexibility.
For example, they can be used to invest in commercial property and
from April 2006 they will be available to residential property investors.
Taper Relief
Allowed as a deduction when calculating capital gains tax and ranges
from 5% to 40%, depending on how long you have owned the asset.
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