SIPP question

[lukemg]

Sounds like a good idea. Already got other questions popping into my head such as if dividends are automatically re-invested do we get notified of the dividend amount for any divi tax calculations, and is a SIPP going to be more efficient than say a S&S ISA, depending on current tax situation.

I imagine there's lots of other stuff to tick off before deciding on best way forward based on own circumstances.

Forget divis, you don't have to declare them.
S&S ISA's - cant do payment from company into these but much better for any personal cash investments due to flexibility (might be bad also, some people cant leave it in there)

[lukemg]

As always, don't take advice from random strangers on the internet - speak to a financial adviser who will understand the figures presented.

As always, for the most important financial decisions of your life, find out how the game is played yourself and don't rely on anyone with a vested interest in a particular course of action for advice.
If you want to know how it all works - have a look at this site - monevator.com they talk a lot of sense.

By all means talk to a financial advisor but for your own sake go in with some knowledge and eyes open.
Most contractors have every opportunity to build up a very sizeable pot over 20 years. It is very simple but it's not easy because of the discipline involved.

[Contreras]

First - Ask the IFA where their money is invested and details of last 5 years returns against world index.
Second - Ditch the IFA they are adding nothing and taking a cut, 0.45 doesn't sound much ? it does if your return is 5%.
Third - Avoid managed funds regardless of the published cost, they have back costs that aren't in the published rate that could easily be taking half your return, plus longterm they dont beat indexes/survivorship/bell curve etc etc.
Fourth - Use discount broker (HL, Interactive Investor)
Fifth - Vanguard Lifestrategy fund 80% shares, global low-cost, diversified, zero maintenance.
Sixth - Invest direct from Company up to 40k, use PCA or value cost averging to spread payments through year.
Seventh - NEVER SELL even if the sky looks like its falling in, if anything buy more
Eighth - thank me in 15 years.

Good advice. I would add that pension rules have been 'tweaked' every year that I can remember and, IMHO, it makes sense to max out the year's ISA allowance first, even though this is less tax efficient, before adding to the SIPP.

This is worth a read - Low cost index trackers that will save you money. Personally I favour ETFs to funds.

[BigRed]

By all means rely on the IFAs and put your trust in them. They are the equivalent of implicitly trusting the recruitment agents because they are the experts.

My current strategy is investing in the FTSE 100 & 250 with a leaning towards good dividends rather than growth. This suggests large mature companies, but spread it around sectors as recently my gains were coming from building but have now shifted. It is very complex, ISAs hold funds you have payed tax on but are tax free on the way out. SIPPs are tax free on entry but taxed on withdrawals. With a SIPP you can take a 25% lump sum tax free OR take 25% tax free on each withdrawal. You can take another SIPP out even when drawing funds from the original but there are SIPP recycling rules with substantial penalties if you recycle lump sums.

The company contribution side I haven't even looked into properly yet. If you go into drawdown on a SIPP you can pretty much withdraw what you like when you like now and leave the remainder to dependents.

It would be good to have a summary for contractors.

[faxfan]

Silly question - but when setting up a pension (SIPP or whatever) does it go in the company name or the directors name?

[Hobosapien]

Silly question - but when setting up a pension (SIPP or whatever) does it go in the company name or the directors name?

Self-Invested Personal Pension

[faxfan]

Self-Invested Personal Pension

So open it in my own name and just move the contributions from the company bank to the SIPP and declare appropriately.

[northernladuk]

So open it in my own name and just move the contributions from the company bank to the SIPP and declare appropriately.

Ask a professional. Not a board of strangers. If you get it wrong or don't do it the best way it's going to cost you IMO

[IR35 Avoider]

Silly question - but when setting up a pension (SIPP or whatever) does it go in the company name or the directors name?

As has been said, you give your name when opening an account, but strictly speaking the account contents do not belong to you in the way those in an ISA or bank account would.

A SIPP is usually a trust where you are (a) the beneficiary and (b) the investment manager. The SIPP provider will provide the trustee, probably a company rather than a person. Both you and your employer can make payments into your SIPP.

So the only time your company name is relevant is when you are making an employer contribution.

(Most of this isn't particularly important to know, for all practical purposes it's as if the SIPP account belongs to you, but it's nice to understand how things work.)

[adubya]

We seem to be complicating matters.

You can open s SIPP in your own name and make company contributions into that SIPP as a director/employee of the company. Those contributions are a legitimate business expense and so come off the company books before corp. tax is applied. There is an annual limit to pension contributions for an individual (£40k) so you need to be mindful of this but otherwise, crack on If you are unsure then consult a professional.