Benefits and advantages of sipp pensions

There are great advantages to taking out a sipp - the most obvious being the scale of the tax perks.

Any investment in a sipp is tax free, which for higher rate payers, means a discount of 40 per cent. And even for lowly ordinary tax rate payers, savings of about 20% are not to be sniffed at.

And in theory at least, it gets even better because of the complex way that the tax system works mean that the actual saving can be even greater.

For example, a top rate taxpaying syndicate which uses a pension fund to buy a house worth £100,000 would get a cash rebate of about £23,000, plus a contribution of about £28,000 to its sipp fund. Syndicate SIPP info here

So while the house would notionally cost £100,000, the taxpayer would benefit from £51,000 of tax breaks, making the investment far more appealing - and cheaper - than it would otherwise seem at first sight.

SIPP info here

Free SIPP guide

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