Charles Stanley enables investors to open last-minute SIPPs

With only days to go until the end of the tax year, Charles Stanley is offering investors guaranteed investment in SIPPs right up the close of business on Thursday 5th April.

Its “Ticket2SIPPs” campaign offers investors three-way access to investing in SIPPs:

via their own stockbroker;
through Charles Stanley Stockbrokers; or
online using Charles Stanley’s online service Fastrade.

As long as investors’ completed forms and cheques arrive before 4.55pm on the last day of the tax year, Charles Stanley undertakes to process the applications and create the SIPP in this tax year. All relevant forms are downloadable from the ticket2SIPPs website (ticket2sipps.co.uk).

As investors make their final tax planning decisions of the year, they should be aware of three things:

(i) new regulations: on 6th April 2007 the establishment, operation and winding up of personal pension schemes become FSA regulated activities. Investors should check that their current SIPP provider will be fully authorised to continue providing SIPP services under the new regulations. EBS Management plc, the pensions arm of Charles Stanley, has been authorised to carry out all necessary activities;

(ii) this year’s allowances: your maximum gross investment in a SIPP in this tax year (2006-07) is £215,000. Higher-rate taxpayers pay £167,700 (net) into the SIPP; the SIPP provider then reclaims the 22 per cent basic rate tax (£47,300) from HM Revenue and Customs (HMRC); and finally the investor reclaims the remaining tax relief (£38,700) from HMRC via the annual tax return. After all tax is reclaimed, the investor therefore enjoys a £215,000 pension fund for an outlay of £129,000;

(iii) how to more than double your contribution in this tax year: by thinking in terms of HMRC “input periods” rather than tax years, investors can add the next tax year’s maximum investable allowance (£225,000 in 2007-08) to this year’s allowance (£215,000) to invest a total of £440,000 before this tax year ends. An “input period” is a term of usually one year in which an investor can put up to the maximum allowance into a pension plan. The input period starts on the date that the investor makes his first payment into the pension and usually ends one year later. However investors can in fact opt to end the input period earlier. If they opt to end the input period before 5th April this year, a new input period starts immediately – and they can therefore invest the next year’s maximum allowance straight away.