In this section we have answers to the most frequently asked questions from professional advisers. For you convenience we have split the FAQs into four sections, Contributions, Transfers, Investments and Pension benefits and death benefits.



We will email you a reply and publish your question on this page.

Contributions

Q. Do you allow in-specie contributions to be made into your SIPP?

We intend to reintroduce in-specie contributions in full from early in the 2008/09 tax year. Until then, we will consider urgent requests to make in-specie contributions on a case by case basis.

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Q. Is stamp duty payable when an investment is transferred into a pension scheme as an in-specie contribution?

Yes, if applicable. Where the investments being transferred in arise from an employee share scheme then stamp duty may not be payable.

As the transfer to the pension scheme will be treated as a disposal, capital gains tax may also be payable.

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Q. How much can I contribute in a tax year?

You can actually contribute as much as you like, but there is a limit on the amount of tax relief that you can receive.

In any tax year you can contribute up to 100% of your ‘relevant UK earnings’ (which is any taxable employment income or chargeable income derived from a trade, profession or vocation you receive in a tax year) and get tax relief on those contributions (prior to your 75th birthday). This is an aggregate limit for all tax approved registered pension schemes of which you are a member.

There is no cap on the level of taxable earnings you receive in a tax year that count as ‘relevant UK earnings’. In addition any contribution your employer makes will not count towards your own personal contribution tax relief limit. However, there is an Annual Allowance for each tax year. Any tax relievable contributions you make to a registered pension scheme, or any your employer make, count towards this Annual Allowance. If you exceed Annual Allowance in any tax year you will become liable to a 40% tax charge on the excess.

If your 'relevant UK earnings' are less than £3,600 in a tax year you can contribute up to this amount and get tax relief (prior to your 75th birthday).

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Q. What is the Annual Allowance?

The Annual Allowance is the upper limit on the amount of tax privileges on contributions made by or in respect of an individual in a tax year to registered pension schemes.

The Annual Allowance will be reviewed and set every five years for the following five years by a Treasury Order. There is no set formula for increases but it cannot decrease.

The Annual Allowance for the next four years is:

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Q. When does the Annual Allowance not apply?

The Annual Allowance test does not apply to the tax year in which an individual takes all his/her benefits from that pension scheme or the year in which the member dies

This means that, if an individual is taking pension benefits, they can contribute in excess of the Annual Allowance and not be subject to the Annual Allowance Charge, and receive tax relief on their contributions provided that they are within 100% of their relevant UK earnings.

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Q. What is a Pension Input Period?

A pension input period is a period over which the pension input amount for an arrangement is measured. In a SIPP the pension input amount is the total of all tax relievable contributions paid by or on behalf of the member plus any contributions paid by his/her employer.

The pension input period need not be the same as a tax year and the period can be changed. It is the pension input amount for the pension input period ending within the tax year that will become part of the total pension input amount to all registered pensions schemes which is tested against the Annual Allowance. This means that pension input amounts arising from later periods which begin within the current tax year but do not end within that tax year will not be tested, for Annual Allowance purposes, for that tax year, but for the next.

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Q. Do you allow SIPP members to end Pension Input Periods early and, if so, how do I arrange this?

Yes, SIPP members can nominate to end their Pension Input Period end date early. Please contact our servicing team for the appropriate form.

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Q. How do I get tax relief on my contributions?

Any contribution you make personally should be made net of basic rate tax relief (22% in 2007/08, 20% in 2008/09). We will claim the basic rate relief due directly from HM Revenue & Customs and add this to your SIPP fund when received. It can take up to eight weeks for tax relief to be received.

If you are a higher rate taxpayer, you can claim the excess tax relief due through your Self-Assessment tax return or by making an earlier separate claim with your tax office.

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Transfers

Q. Do you allow protected rights to be transferred into your SIPP?

Not at present. However, the DWP has issued a consultation paper proposing to allow all SIPPs, including non-insurance based SIPPs, to hold protected rights from October 2008. Our plan is to be able to accept such transfers from that date.

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Q. If I am looking to transfer an arrangement that is in drawdown from another pension scheme, does this transfer need to be held in a separate plan?

It will need to be held in a separate plan if you have already taken pension benefits from your SIPP in the form of drawdown. Further information can be found in an e-newsletter that we issued in January 2008.

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Investments

Q. Do you allow unquoted investments to be held in the Full SIPP?

Yes. If you wish to proceed with the purchase of an unquoted investment on behalf of a client, please contact us for a copy of our investment guide and investment instruction form.

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Q. What are your charges for purchasing unquoted investments?

Details of our charges can be found in our Fee Schedule. Please note that, for more complex cases, we reserve the right to charge a higher fee to reflect the extra work required.

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Pension benefits and death benefits

Q. A client has stated he has the ability to retire at 50 from his final salary pension scheme. This is despite not reacing 50 until after 2010. Part of his pension was suplemented as part of a redundancy payment. Can he therefore take benefits from 50 despite the increase to 55 in 2010.

It is possible that the member may be able to take pension benefits at age 55 after 5 April 2010.

The following link to HMRC guidance confirms the circumstances in which it may be possible to take pension benefits at an early age.

http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM03106020.htm

We would suggest that you check the individual's position against the specific requirements within the HMRC manual.

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Q. Can death benefits from the Full SIPP be paid out on an in-specie basis?

Yes.

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Q. Will you permit an unauthorised payment to be made following the death of a pension member with an alternatively secured pension fund?

This is something we will consider but we, along with all other SIPP providers, cannot guarantee that we will allow an unauthorised payment to be made.

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Q. How often will the maximum income I can draw from my fund be reviewed?

From 6th April 2006 your maximum income will be reviewed up until age 75 every five years, rather than every three years. You can elect for the maximum income to be recalculated on any of the anniversary dates.

If you decide to continue taking income withdrawal beyond age 75 (this is called an Alternatively Secured Pension) your maximum will be reviewed annually.

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We will email you a reply and publish your question on this page.

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Enewsletters

We issue topical Enewsletters to registered advisers including up-to-date technical information on the latest hot topics and updates on our products and services. Click here if you wish to register and start receiving our monthly Enewsletter.

12 November 2007
Transfer of Full SIPP administration from London to Dundee

28 June 2007
SIPPs and Protected Rights

31 May 2007
Launch of our Adviser Support Service

22 May 2007
Launch of our new Pension Illustration Service

18 April 2007
Government confirms 82% tax on death of member in ASP

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