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SIPPs put positive Spin on Market Volatility

SIPP Solutions through SIPP Contributions

Current fluctuations in the world stock market may spell doom and gloom in many quarters, but there’s a chance to make hay whilst the sun isn’t shining!

In Specie Share Contribution

One distinct area is for the in-specie contribution of a person’s shares into a Self Invested Personal Pension (“SIPP”).

Normally this could lead to the joys of Capital Gains Tax (“CGT”) but, with the market at a low point, and with an investor committed to the long term, there could be some immediate tax advantages.

Capital Gains Tax Mitigation through a SIPP

Firstly in current depressed markets CGT could be reduced or even wiped out if an investor chooses now as the time to puts shares into their SIPP as a contribution. It is not beyond the realms of possibility that some shares (with serious long term potential) are now valued at less than purchase price – so moving these now into the SIPP would be free from CGT.

Once the market recovers any gain made will be free from CGT when they are held within the SIPP wrapper.

Most importantly, they will get tax relief of 20% paid into their SIPP and the remaining 20% will be able to be deducted in the individual’s end of year tax return!

Or, again with the long term in mind, they could also be sold to the SIPP, (if the SIPP holds sufficient cash) thus releasing capital at a time when liquid assets might be more advantageous!

This could be a truly recordable event of a cloud having a silver lining.

Mar 26, 2008