What a deviation one Day makes!

6th April 2006 is A Day. Everything about pensions changes then: mostly for the better, and you need to plan for those changes now.

1. You are able to acquire tax relief on just about all your capital.

2.Your pension can buy buy-to-lets, holiday homes and villas abroad; and it can even take out a mortgage!

3. You take charge of how you enjoy you pension when you retire, you in no way have to invest in an annuity and your children can inherit your pension when you die.

1. All income qualifies for tax relief

You can make payment all your capital into a SIPP (up to £215,000 pa) which gets full tax relief. Therefore if you earn £100,000 yearly and you are sitting with cash in a bank account that you don’t need, you can pay £100K into your SIPP and it will cost you as little as £60K following full tax relief.

One amazing thing is that you can start a pension for your children and get tax relief on that, and the money goes outside of your estate for IHT purposes, so if you have spare cash and want to help your kids enjoy their future it is worth considering.

2. Your pension can purchase assets

A SIPP is a self investedpersonal pension. It is able to purchase residences in the UK or Abroad. You can even sell it property you already own, and hence free up the equity. What’s more, your SIPP can take out a mortgage to help with the funding. And, of course, you can move your existing pension funds into your SIPP, so that takes the money away from pension company funds and frees it up to buy property.

The tax key features of your SIPP owning assets are enormous.

a)Rental Income is tax free, you pay no Income Tax

b)You never pay Capital Gains Tax

c)Assets within your SIPP are not part of your personal estate on death.

So, if you personally own another property, the rent you receive could be eaten away by tax; when you sell the property the Taxman takes another bite, and if you die he gets you again. Even so, place that home into a SIPP and the Inland Revenue will allow you experience immense tax benefits. That is why SIPPs are the hottest thing happening and millions of people will take one out over the next few years.

3. Compulsory Annuities close out and Retirement flexibility escalates Most people hate having to buy an annuity when they die. With an annuity you give up your pension funds and instead you get an income for life, but that dies with you (or your partner). So, as well as being very inflexible it is poor value for money if you die early and does not allow you to pass your pension funds on to your children or grandchildren.

After A Day, 25% tax-free moneycan be withdrawnfrom your SIPP. After which you choose how to receive an income or not to if that is what you desire! On your death your remaining pension fund goes to your nominated beneficiaries.

At this time what actions do you take?

If you have existing pension funds, you need to get these moved into a SIPP now. It may take quite a time for these transfers to transpire, and you prefer the profits obtainable for A Day.

If you are purchasing a asset off-plan, your SIPP can make payment the deposit today. SIPPs can’t buy property until next April, but they can start to buy off-plan, so you need to know how the process works.

So, in a nutshell, consider expertguidance at present. Time is running out to buy property the most flexible tax efficient way ever allowed.