General Information

What is a SIPP?

A SIPP is a Self Invested Personal Pension. It is designed for accumulating savings in a tax efficient manner to provide benefits when you retire. A SIPP differs from a personal pension in that often a SIPP will offer greater control and flexibility on what you can invest in.

Who can have a SIPP?

In broad terms you can have a SIPP if you are employed, self employed or retired. A SIPP can also usually be set up by a parent or guardian for a child but CFDs are only available to those aged 18+.

In order to benefit from the tax advantages of a SIPP, you either need to have earnings that are subject to UK tax or be a UK resident for tax purposes.

What are the tax benefits?

Contributions made by you to a SIPP will be subject to tax relief* as illustrated below:

Contribution	Cost to Basic Rate Taxpayer	Cost to Higher Rate Taxpayer#
£100 per month	£80	£60
£1,000 single	£800	£600
£10,000 single	£8,000	£6,000

The basic rate tax relief is claimed on your behalf by your SIPP operator and then added to your SIPP.

# If you are a higher rate taxpayer then you can claim additional tax relief up to the higher rate through your annual tax return – in the examples above that would mean an additional £20, £200 and £2000 tax relief respectively.

The tax benefits once invested*:

Trading CFDs in a SIPP	Tax Payable
Stamp Duty	None
Capital Gains Tax	None
Income Tax	None
Inheritance Tax †	None

Subject to exceptional circumstances, once invested, funds grow free of UK tax in that there is no income or capital gains tax to pay.

From age 50 (55 from 2010), up to 25% of your fund can be taken as tax free pension commencement lump sum; clearly if you opt to take this tax free lump you will get a smaller pension.

† Inheritance tax rates are determined by individual circumstances and professional tax advice should be sought.

Can I invest my tax relief in my Trader SIPP Account?

Yes.

Your SIPP Operator will, on your behalf, claim basic rate tax relief direct from HM Revenue & Customs. This can take up to ten weeks to arrive. When it does though, the tax relief can be added straight into your Trader SIPP Account at your request.

Any higher rate relief is claimed through your annual tax assessment rather than being rebated into the SIPP.

Can my employer make SIPP contributions?

Employer contributions can be even more tax efficient. Within limits, employer contributions are not taxed as benefits in kind and get corporation tax relief. There are also no national insurance contributions to pay on employer contributions. This means that employer contributions are often the most tax efficient way of all to make contributions to a SIPP.

How much can I contribute to a SIPP?

There are limits on the contributions to SIPPs that attract tax relief.

If...	Then...
You have earnings that are subject to UK tax	You can contribute an amount up to 100% of your earnings and receive tax relief
You have no earnings	The maximum you can contribute and receive tax relief is £3,600 per year

The above limits would take into account total pension contributions made. You can contribute more than the above amounts, subject to an overall annual allowance, although such contributions would not attract tax relief.

There is an overall maximum annual contribution allowance that applies to total pension contributions in any one tax year as illustrated below:

Tax Year	Allowance
2007/08	£225,000
2008/09	£235,000
2009/10	£245,000
2010/11	£255,000

It is possible for your employer or even a third party to make contributions to the SIPP on your behalf although of course such contributions would have an impact on the limits above.

In addition to the above annual allowance there is also a limit on the overall amount of total pension funds at retirement – this is known as the ‘lifetime allowance’. As with the annual allowance, the lifetime allowance will increase over the next few years, as below:

Tax Year	Allowance
2007/08	£1.6 million
2008/09	£1.65 million
2009/10	£1.75 million
2010/11	£1.8 million

The tax implications of exceeding the lifetime allowance can be severe so professional advice should be sought if you think you are close to the lifetime allowance.

If you are trading with funds from an existing SIPP in a Trader SIPP Account it is important to note that there may be a restriction on the amount and/or proportion of your SIPP fund that can be invested in CFDs. You should contact your SIPP Operator for details of this.

Trading CFDs within a SIPP

Are CFDs suitable for SIPPs?

Any investment within a SIPP needs to have limited liability. This means that you cannot lose more than the value of the investment made. With CFDs there is the possibility of losing more than your initial investment; CMC Markets however have incorporated certain design features to ensure that your trading account within your SIPP cannot go ‘overdrawn’. Features include no-slip and no deficit guarantees. You should note though that CFDs, despite these guarantees, are still high risk products and you could lose your total SIPP investment.

How do I invest existing funds I already hold in a SIPP?

The funds need to come to CMC Markets via your SIPP Operator. To do this you need to complete and return to CMC a Trader SIPP Account application form – see link below ‘Trader SIPP Application Form’. Apart from applying to set up the trading account, this also authorises your SIPP Operator to pay the funds to CMC Markets.

We then send the application to your SIPP Operator and liaise with them to ensure the funds are received. Once received, a trading account is set up in the name of your SIPP with authority granted to you to trade in your capacity as scheme member of your SIPP.

Trader SIPP Account Application Form

How do I make new contributions via a SIPP into a Trader SIPP Account?

If you already have a SIPP and want to trade with new contributions in order to obtain additional funds with which to trade, through the tax relief, the process is outlined below:

1. Ensure your SIPP Operator will allow CFD trading;
   
2. Once satisfied CFD trading is allowed, make the required contribution into your SIPP;
   
3. Complete the Trader SIPP Account Application – see link below – asking your SIPP Operator to pay both the initial contribution and resulting tax relief to your trading account. Please note this will probably be in two separate payments as the tax relief can take up to ten weeks to be credited to your SIPP – as such your SIPP Operator may require an additional 'Subsequent Payment Form' from you;
   

Trader SIPP Account Application Form

How can I maximise trading with tax relief?

Contributions you make to a SIPP attract tax relief, with basic rate relief being built into your contribution (i.e. you pay net of basic rate tax) – the basic rate relief is then claimed by your SIPP operator. Any higher rate relief is given through your annual tax assessment.

Therefore if you wish to maximise the tax advantage when trading CFDs then new contributions, subject to limits, will provide extra funds through tax relief, with which to trade. Remember, there can be a delay of some weeks between making a contribution to your SIPP and the tax relief being received by your SIPP operator. Consequently two separate payments may need to be made by your SIPP operator as the example below illustrates:

1. You make a contribution of £8,000 to your SIPP;
   
2. Once cleared, this sum can be paid from your SIPP to your Trader SIPP Account;
   
3. Your SIPP operator claims tax relief of £2,000 on your behalf which may take up to ten weeks to arrive and be credited to your SIPP;
   
4. A further payment of £2,000 (representing the tax relief) can then be made into your Trader SIPP Account – you may need to send a 'Subsequent Payment Form' to your SIPP Operator.
   

Trader SIPP Account

What is the Trader SIPP Account?

This CFD Trading account has been created specifically for SIPPs. It includes two important guarantees:

1. You cannot lose more than you invest. CMC Markets offer a ‘No Deficit’ guarantee which means the account cannot go ‘overdrawn’.
   
2. All stop orders are filled at the placement level (a no-slip guarantee);
   

What is a no-slip guarantee?

A built in guarantee that applies to all stop orders placed providing an additional security if the market ‘gaps’. Your stop-order is guaranteed to be placed at the placement level even if the market ‘gaps’ – this means your position will be closed at a pre-selected level by you, despite dramatic market movements.

What markets and instruments can I access?

CFDs allow you to trade on a whole host of global instruments all from one account. Trade on Shares, Indices and FX.

Range of Markets

What are the costs?

CMC Markets is renowned for offering famously tight spreads. The tighter the spread, the easier and faster it is for you to make a profit.

What are the costs?

What is the minimum investment?

The minimum initial investment is £1,000 with further top-up investment set at £500.

Will I have access to the CMC Markets Trading Software?

You will have access to CMC’s full range of trading tools and the award winning trading software, Marketmaker when you trade within a SIPP.

Is the CMC Markets Trader SIPP Account covered by the Financial Services Compensation Scheme?

You may be covered by the Financial Services Compensation Scheme (FSCS) if CMC Markets UK Plc is unable to meet its obligations. This would depend on the type of business, your status and the circumstances of the claim. Most types of investment business are covered for 100% of the first £30,000 and 90% of the next £20,000, so the maximum compensation is £48,000. Further information about compensation arrangements is available from the FSCS. You can contact the FSCS by writing to the Financial Services Compensation Scheme, 7th Floor, Lloyds Chambers, Portsoken Street, London, E1 8BN, or by emailing them at the email address provided on the FCSC website at www.fscs.org.uk.

Application Process

How do I apply for a Trader SIPP Account?

1. Complete Trader SIPP Account Application – see link below;
   
2. Return completed and signed application to CMC Markets;
   
3. We will forward to your SIPP operator and liaise with them on any questions they have;
   
4. Once we have received funds we will open a Trader SIPP Account in the name of your SIPP and notify you that the account is ready to trade;
   

Trader SIPP Account Application

Why do my scheme Operator/Trustees need to sign an application form as well as me?

This is because the trading account will be opened in the name of your SIPP. The reason for this is that the funds are the legal property of your SIPP, albeit you as scheme member may have control over where the funds are invested. Often SIPPs have ‘trustees’ (of which you may be one) and the trustees’ responsibility, among other things, is to hold the assets of the SIPP on your behalf and ensure the relevant rules and regulations are complied with. By signing the application form, your trustees and/or operator are confirming they are satisfied that trading CFDs within the Trader SIPP Account will not contravene SIPP rules & regulations plus they will be authorising you, as the scheme member, to undertake the trading activities in your Trader SIPP Account on behalf of the SIPP.

In whose name is the investment made?

The trading account will be opened in the name of your SIPP, with you as the designated trader. This is because the scheme assets belong to your SIPP rather than in your personal name, although, subject to your SIPP Operator's approval, you will be able to undertake the day to day trading activities on behalf of your SIPP.

How do I add further funds to my Trader SIPP Account?

Any top-ups to your account must come via your SIPP operator – this is even the case where you get a margin call.

SIPP operators will have their own procedures for accepting and acting upon scheme member instructions however to assist the process we have a ‘Subsequent Payment Form’ that you can request from CMC Markets, complete, sign and send to your SIPP Operator.

Please bear in mind that this process can take slightly longer than simply paying money into your account yourself so extra time should be allowed for, especially in the case of a margin call. We recommend that you encourage your SIPP operator to send money electronically.

How do I apply for a SIPP if I don't have one already?

CMC Markets do not provide advice as to whether a SIPP is suitable for you or on which SIPP provider to use. If you do not have a SIPP we have teamed up with City Trustees who will allow the Trader SIPP Account within their SIPP. When assessing both the suitability of a SIPP and a SIPP provider relevant to your personal circumstances, we recommend you should seek professional independent advice.

Funding a SIPP Trading Account

Initial Payment

All payments into your Trader SIPP Account must come via your SIPP Operator. The application form contains the necessary instructions to make the initial payment.

Subsequent Payments

All subsequent payments into your Trader SIPP Account must come via your SIPP Operator. Different Operators will have differing processes however many will require a written authority.

Margin Calls

It is your responsibility to monitor and maintain sufficient equity and margin in your Trader SIPP Account at all times.

Please be aware that where additional margin is required in order to maintain an open position, you will need to notify your SIPP Operator to make the payment from your SIPP. As the payment is coming from your SIPP, this may take slightly longer than if you were making the payment direct. You should always ask your SIPP administrator to remit funds electronically in such cases, although there is no guarantee that your SIPP administrator will remit the funds in time to keep the position open or that CMC Markets will hold the position open whilst waiting for funds. Ideally, if you anticipate making further payments to your Trader SIPP Account, especially if to meet margin calls, it is suggested you retain accessible funds within your SIPP to meet such eventualities.