Providing information and clarity

for British Expats looking to Transfer their UK Pension Offshore


Self-Invested Personal Pension Schemes (SIPPS)


A Self-Invested Personal Pension (SIPP) is typicaly suited to UK Residents and Expatriates that intends to work outside of the UK for less than 5 years. However long term Expats may also wish to hold a SIPP for the Taxationa benefits that can be gained.


A SIPP is the name given to the type of UK-government-approved personal pension scheme, which allows individuals to make their own investment decisions from a full range of investments and asset classes as approved by HM Revenue & Customs (HMRC).


What can be Invested in via a SIPP?

Investors may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees (usually the SIPP provider).


HMRC has approved the following Investment that will not be subject to Tax charges:-


•Stocks and shares listed on a recognised exchange.


• Futures and options traded on recognised futures exchange.


• Validated carbon credits (VCS & Gold standard)


•Authorised UK unit trusts and OEICs and other UCITS funds.


• Unauthorised unit trusts that do not invest in residential property.


• Unlisted Shares


•Investment trusts subject to FSA regulation.


• Unitised insurance funds from EU insurers and IPAs.


• Deposits and deposit interests


•Commercial property (inc. hotel rooms)


•Ground rents (as long as they do not contain any element of residential property)


•Traded endowments policies


•Derivatives products such as a Contract for difference (CFD)


•Gold bullion, which is specifically allowed for in legislation



Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties (and therefore typically not allowed by SIPP providers) include:


•Any item of tangible moveable property (whose market value does not exceed £6,000) – subject to further conditions on use of property.

•Other exotic assets like vintage cars, wine, stamps and art.

• Residential property


Taxation & Technical Aspects of a SIPP:


•Contributions to SIPPs are treated identically to contributions to personal pensions.


•Any "relevant UK individual" can contribute up to 100% of their relevant UK earnings into a SIPP, or, if they have no earnings, they can contribute up to £3,600 gross per annum e.g. Mrs Smith is earning £100,000 per year and she can contribute up to £100,000 per year into her SIPP. Anyone, even a child, can contribute up to the non-earnings limit of £3,600 gross into a SIPP


•The annual maximum tax relievable contribution level is £50,000 for 2011/12. You can contribute more, but it will be taxed at 40%. 


•From 2011/12 it is possible to carry forward any unused allowance from the previous 3 tax years (for this purpose the maximum allowance is £50,000 per tax year). 


• Pensionable income including employment income, bonus, benefits in kind, self employment and partnership profits can all be contributed (Pensionable income does not include investment income, rental income or pension income).


• 25% of your pension investment can be taken as a tax free cash lump sum.


•The remaining 75% must be left for a long term pension income. This can be taken as an income drawdown or purchase an annuity.


•Drawdown income is limited (by the provider) to approx 7% of the drawdown fund value (this is reviewed every 5 years). Income taken from DrawDown or an Annuity is taxed 'as if' earned income at the members highest marginal rate.


•If the fund value exceeds the 'Lifetime Allowance' of £1.8 million (tax years 2010/11 and 2011/12) at retirement, then the amount above £1.8 million will be taxed at 55%. From April 2012 the 'Lifetime Allowance' will fall to £1.5 million but there will be provisions for those previously relying on the higher limit.


•SIPPs can borrow up to 50% of the net value of the pension fund to invest in any assets, although in practice SIPP trustees are only likely to permit this for commercial property purchase.


Can we Help? - If you are a British expat or you have lived in the UK and contributed to a UK Pension for over 7 years and want information on how to transfer your pension offshore, we can help you. You could be transferring your UK pension abroad into a QROPS or QNUPS tomorrow!


You could be saving you and your family significant amounts of Pension income that could currently be lost.


*SIPPS are available for clients living in the UK and also living abroad who have a UK Pension and would like moe control over their investment options.




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