GIAs & Bonds held in SIPP
wsj2021
Member
Hi All
What is the tax situation and also the benefit of holding GIAs & Bonds in SIPPs? Are GIAs still subject to CGT within a SIPP even though pensions don't pay CGT? Also, could you still take tax deferred withdrawals from a bond held within in a SIPP even if the income from the SIPP would be taxable?
As a relatively new Paraplanner I haven't come across this that often and there doesn't seem to be much info online.
Thanks
Comments
GIAs - SIPP has no tax liability on gains / income.
Bond in a SIPP - onshore bond taxed internally and non reclaimable.
Bonds - encashment; no tax charge within the SIPP.
So, onshore bond in a SIPP is a really bad idea.
GIA v Offshore Bond would be down to cost comparison (bond unlikely to be lower cost) so for new biz Offshore Bond is most likely to be the wrong (cost) choice.
However, some investment options (eg PruFund Growth) are not available under a GIA so an offshore bond wrapper would be appropriate - although if this was the case then a transfer to Pru Retirement Account would be better advice than having a SIPP.
HOWEVER, if you are looking at an old SIPP with an old offshore bond it may well be that at the time the advice was given the offshore bond was actually better from a cost point of view than a GIA.
In this case it may be cost effective to surrender and move to GIA; but I wold not be surprised if it actually wasn't cost effective to surrender an old offshore bond on a cost comparison to a GIA basis.
Hope this helps a bit.
SIPPs (and other UK registered pension schemes) can also access PruFund through a Pru Trustee Investment Plan ( which you'd need to cost check against the offshore bond)