So what are the rules?
From April 6 2006 - widely known as A-Day - the rules governing pensions changed and it became possible to pay up to £215,000 into a Sipp each year (rising to £255,000 by 2010).
If, like most people, you earn less than this, the maximum amount that you can pay in will be limited to your gross pensionable income. Like any other pension investment, this money will be free of tax
The rules state that the maximum that can be borrowed is 50 per cent of the fund's value. So a person with a £200,000 fund will be able to borrow £100,000 to invest.
Money from existing pension funds will be transferable into Sipps free of tax although the relevant companies are likely to charge administration fees for doing this.
Anyone taking out a Sipp must be a UK resident and under 75.
Investing in exotic products like jewellery, fine wines, antiques and classic cars is definitely out but it is possible to invest property in a Sipp, but with these provisos:
- The property must be bought by a syndicate of at least 10 people
- The members of the syndicate must not be related
- The syndicate members cannot use the property for their own use
In other words the scheme is not open to investors with buy-to-let property or holiday homes that they intend to use.
What are the rules?
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