*/
David Quinton explains how barristers can now use pension plans to help buy premises through the Professional Practices SIPP
Barristers, like any other self-employed professionals, need to consider carefully how to generate funds for retirement to ensure a comfortable lifestyle in older age. Recent developments have substantially improved the pension planning opportunities.
Barristers can now contribute up to 100% of earnings—up to a generous cap of £235,000 for the 2008/09 tax year—securing income tax relief at up to 40% on that contribution. They can continue to fund as aggressively as they wish within their annual allowances, providing their total retirement fund does not exceed the annual lifetime allowance (£1.65m for 2008/09).
Self-invested pension plans (SIPPs) offer flexibility, control over investments, and the ability to hire and fire advisers without penalty. But unlike private company directors, the self-employed have been denied the ability to use pension savings to assist in their business—until now.
The sweeping reforms to pension regulation enable a barrister to use pension funds to purchase commercial property. Three important advantages flow from this route: tax relief on contributions going in; arms’ length rent payable to the pension fund (deductible as an expense to the business); and tax free capital growth on the building and its income. An individual SIPP may offer this facility, but the capacity to purchase commercial property will be restricted by the size of the fund and the annual lifetime allowance of the individual concerned. However, a recent development from the new legislation, the Professional Practices SIPP (PP SIPP), will overcome this obstacle.
Barristers, and groups of like-minded individuals generally, can make their pension contributions into a pooled fund and combine their annual allowances to create far greater buying power than an individual SIPP investor. If, say, 10 barristers in chambers joined together in a PP SIPP, they have the collective potential to buy and retain a building in the PP SIPP worth up to £16.5m. Existing pension arrangements can be transferred into the pooled scheme if required, and the fund can gear up by borrowing up to 50% of the net asset value of the pooled fund. Thus, if the 10 barristers transfer existing pension funds of £2m into their PP SIPP when they set it up, they can, with gearing, potentially buy commercial property of up to £3m straight away.
Barristers joining chambers can be eligible to be part of the PP SIPP, and those who move away can leave the plan. However, all decisions need to be unanimous. With careful management, including policies about joining and leaving, the PP SIPP can be tailored to suit each chambers.
David Quinton is a senior consultant at Smith & Williamson. Email: David.quinton@smith.williamson.co.uk
Barristers can now contribute up to 100% of earnings—up to a generous cap of £235,000 for the 2008/09 tax year—securing income tax relief at up to 40% on that contribution. They can continue to fund as aggressively as they wish within their annual allowances, providing their total retirement fund does not exceed the annual lifetime allowance (£1.65m for 2008/09).
Self-invested pension plans (SIPPs) offer flexibility, control over investments, and the ability to hire and fire advisers without penalty. But unlike private company directors, the self-employed have been denied the ability to use pension savings to assist in their business—until now.
The sweeping reforms to pension regulation enable a barrister to use pension funds to purchase commercial property. Three important advantages flow from this route: tax relief on contributions going in; arms’ length rent payable to the pension fund (deductible as an expense to the business); and tax free capital growth on the building and its income. An individual SIPP may offer this facility, but the capacity to purchase commercial property will be restricted by the size of the fund and the annual lifetime allowance of the individual concerned. However, a recent development from the new legislation, the Professional Practices SIPP (PP SIPP), will overcome this obstacle.
Barristers, and groups of like-minded individuals generally, can make their pension contributions into a pooled fund and combine their annual allowances to create far greater buying power than an individual SIPP investor. If, say, 10 barristers in chambers joined together in a PP SIPP, they have the collective potential to buy and retain a building in the PP SIPP worth up to £16.5m. Existing pension arrangements can be transferred into the pooled scheme if required, and the fund can gear up by borrowing up to 50% of the net asset value of the pooled fund. Thus, if the 10 barristers transfer existing pension funds of £2m into their PP SIPP when they set it up, they can, with gearing, potentially buy commercial property of up to £3m straight away.
Barristers joining chambers can be eligible to be part of the PP SIPP, and those who move away can leave the plan. However, all decisions need to be unanimous. With careful management, including policies about joining and leaving, the PP SIPP can be tailored to suit each chambers.
David Quinton is a senior consultant at Smith & Williamson. Email: David.quinton@smith.williamson.co.uk
David Quinton explains how barristers can now use pension plans to help buy premises through the Professional Practices SIPP
Barristers, like any other self-employed professionals, need to consider carefully how to generate funds for retirement to ensure a comfortable lifestyle in older age. Recent developments have substantially improved the pension planning opportunities.
The Chair of the Bar sets out how the new government can restore the justice system
In the first of a new series, Louise Crush of Westgate Wealth considers the fundamental need for financial protection
Unlocking your aged debt to fund your tax in one easy step. By Philip N Bristow
Possibly, but many barristers are glad he did…
Mental health charity Mind BWW has received a £500 donation from drug, alcohol and DNA testing laboratory, AlphaBiolabs as part of its Giving Back campaign
The Institute of Neurotechnology & Law is thrilled to announce its inaugural essay competition
How to navigate open source evidence in an era of deepfakes. By Professor Yvonne McDermott Rees and Professor Alexa Koenig
Brie Stevens-Hoare KC and Lyndsey de Mestre KC take a look at the difficulties women encounter during the menopause, and offer some practical tips for individuals and chambers to make things easier
Sir Geoffrey Vos, Master of the Rolls and Head of Civil Justice since January 2021, is well known for his passion for access to justice and all things digital. Perhaps less widely known is the driven personality and wanderlust that lies behind this, as Anthony Inglese CB discovers
The Chair of the Bar sets out how the new government can restore the justice system
No-one should have to live in sub-standard accommodation, says Antony Hodari Solicitors. We are tackling the problem of bad housing with a two-pronged approach and act on behalf of tenants in both the civil and criminal courts