Question
Is my sipp able to borrow to increase it's value by 33%? Am I then able to take my tax free cash? Is the borrowing able to be carried over? What happens on death?Answer
Self-invested personal pensions (SIPPs) can borrow up to 50% of pension's assets for investment purposes. So, for example, a SIPP holding assets worth £100,000 could borrow £50,000. If the pension has already borrowed money this must obviously be deducted during the calculation.
However, SIPP providers normally only allow borrowing when purchasing commercial property, i.e. it's unlikely your pension could borrow money to buy shares.
Loan interest must be at a commercial rate (i.e. you can't lend interest-free to your own pension) and bear in mind that low cost SIPPs don't normally offer a loan facility - you'll need to use a more expensive 'full-service' SIPP.
Yes, you are able to take tax-free cash while the loan is in place, but if you've purchased a property there'll need to be sufficient other assets in the pension fund to pay out the cash (to avoid selling the property).
The loan provider will probably require the loan to be repaid on death, necessitating either the sale of the property or, more commonly, a life insurance policy being taken out at the time of the loan to protect against this.
Is my sipp able to borrow to increase it's value by 33%? Am I then able to take my tax free cash? Is the borrowing able to be carried over? What happens on death?Answer
Self-invested personal pensions (SIPPs) can borrow up to 50% of pension's assets for investment purposes. So, for example, a SIPP holding assets worth £100,000 could borrow £50,000. If the pension has already borrowed money this must obviously be deducted during the calculation.
However, SIPP providers normally only allow borrowing when purchasing commercial property, i.e. it's unlikely your pension could borrow money to buy shares.
Loan interest must be at a commercial rate (i.e. you can't lend interest-free to your own pension) and bear in mind that low cost SIPPs don't normally offer a loan facility - you'll need to use a more expensive 'full-service' SIPP.
Yes, you are able to take tax-free cash while the loan is in place, but if you've purchased a property there'll need to be sufficient other assets in the pension fund to pay out the cash (to avoid selling the property).
The loan provider will probably require the loan to be repaid on death, necessitating either the sale of the property or, more commonly, a life insurance policy being taken out at the time of the loan to protect against this.
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