From: "Andy Pandy" 
Newsgroups: uk.finance
Subject: Re: Pensions investment
Date: Sun, 22 May 2005 09:10:39 +0100


"Rob graham"  wrote in message
news:d6iaml$2o$1@nwrdmz03.dmz.ncs.ea.ibs-infra.bt.com...
> > "So a £100,000 property bought within a Sipp would, after relief at 40 per
> > cent, cost a higher-rate taxpayer just £60,000. Rental income will
> > accumulate tax-free and there is no capital gains tax on profits when the
> > property is sold."
> >
> > Can anyone please explain to me how the £40,000 relief can be recovered
> > from
> > the IR.
>
> If you make a payment of £78,000 into the SIPP the Revenue will return
> £22,000 as tax relief. The other £18,000 will come off your tax bill,
> assuming the whole of it doesn't take you below the higher rate tax band.

So you'd need to earn over £135,000 pa for this to work?

> > I assume the pension fund will have to pay £100,000 for the property.
>
> Yes. But you can borrow half the fund and raise a mortgage for the rest
> (after 6th April 2006). The mortgage costs are borne by the SIPP funds.

Ok, then you'd need to earn over £85,000 pa for this to work. Or can you spread
the purchase cost over several tax years?

--
Andy