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Private SIPPS pensions

Q: Is it possible to have more than one self-invested pension plan (SIPP)? Also if I don't convert a SIPP to a pension before my demise will the fund go to my estate and become liable to inheritance tax?

A: SIPPs are essentially personal pension plans with greater investment choice and flexibility and you can hold as many as you wish.

Where SIPP benefits written under trust have not been taken before age 75, the SIPP fund value can pass as a tax-free lump sum (subject to not exceeding the pensions lifetime allowance of £1.5m) to the trust’s beneficiaries.

If death occurs after age 75, the value of any funds remaining in the SIPP, could be used to provide the deceased’s/spouse/civil partner/ dependents with an income and there would be no tax to pay on the fund.  

However, if any SIPP funds remaining on death after age 75 are paid as a lump sum, then a 55% tax charge will apply regardless of who the beneficiaries are.

Kevin Quinn

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