Woodland in SIPPS (Self Invested Personal Pensions)
Many people are wondering about woodland in SIPPS and what actually are SIPPs? SIPP stands for Self Invested Personal Pension and is in fact a way to invest for the future for retirement & also benefit from the fact that your money will be income tax free. HMRC gives tax relief on investments made into pensions to help folk to save up for retirement, as ultimately less burden will be on the government to pay pensions if people can be persuaded to invest in their own. A SIPP is like a pension version of the old ISA, like a wrapper for a selection of investments for use in retirement, and in case you were wondering, woodland in SIPPS is perfectly legal.
Advantages Of Woodland In SIPPS
Normally a SIPP being as it is self-invested, enables you to have the choice of how your retirment money gets invested. An off the shelf pension would not be as aggressive in its investing approach as it needs to have security of funds to pay soon-to-be retirees. However someone younger with more time until retirement can stand to invest in less cautionary funds and investment vehicles and so reap the benefits of that. A SIPP can buy into forest or agricultural land as an alternative investment, & then place them in their Sipps. Not all forests are invested in for wood products as some land agents around the South East have had investors put amenity woodland in SIPPS and even fishing rights to river banks and shooting rights on moorland.
Buying forests in SIPPs has become more and more popular and widely known. As long as you get a RICS valuation for the purchase that will show you have bought at or less than market value, & can prove commercial intent then it will be ok. Alternatives to buying a woodland in the UK is to buy into a managed forestry scheme in Germany as rising German land prices and hardwood timber prices have enabled many investors to invest by SIPP there.
Tax Benefits Of Woodland In SIPPS
A SIPP has a limit of borrowing 50% of total fund value to make a purchase. So a 40% tax earner could buy some woods that cost one hundred grand, but pay only sixty for it. Every SIPP will have a trustee board & to put some woodland in a SIPP you must use an FSA registered advise.
But direct investment in the rural areas of the country are mainly the domain of wealthy investors that at least 100,000 & often much more in their SIPP. Smaller investors are more likely to use resources, especially an exchange-traded fund (ETF) offered by the likes of iShares or Power Hares. Through these ETFs, it's now possible to track funds that try to follow important alternative indices invest in forestry companies & rural land-based real-estate investment trusts (the EPIC code for iShares forestry fund, right, THREE). This tracker funds are also aimed at the green investor with investment vehicle that has exposure to renewable energy. Both Power Hares & iShares promote renewable energy ETFs, while SocGen tracker has a range of funds that invest in solar energy, bio-ethanol & also producers of uranium. So if you have less funds you can invest in investment trusts or ISA's in the sector, but if you have more funds you can directly invest in woodland in SIPPs.