What is a SIPP?

SIPP stands for self-invested personal pension, a type of pension available to UK residents that grants you greater freedom when investing.

Remember your capital is at risk.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

The benefits of a SIPP

SIPPs are subject to the same tax benefits as other types of pension, so you’ll receive tax relief relative to your current income tax rate.

Please note that individual tax circumstances may differ and tax laws can change.

  • For any contributions you make, the government will top it up with tax relief at 20%. So if you pay £8,000 into a SIPP, you’ll have £10,000 to invest with

  • Higher-rate tax payers can claim an extra 20% back in your self-assessment tax return. This money will be sent to you as a rebate

  • This is also the case for top-rate tax payers, who can claim an extra 25% back as a rebate

  • Any investments you make in your SIPP will grow free from capital gains or income tax1

  • You can invest everything you earn in a tax year into your SIPP – up to a maximum ‘annual allowance’ of £40,000 – without incurring a tax charge2

  • You may be able to carry forward unused allowances from previous tax years. Please consult your financial advisor for more information

What can I invest in?

With other types of employee or personal pension, you’ll typically choose between a set number of funds offered by your provider. With a SIPP, you can choose exactly what you want to trade from a wide range of investments. This usually includes (but isn’t limited to):

  • Stocks listed on a recognised exchange
  • Fixed-income products
  • UCITS funds, including ETFs and unit trusts
  • Commercial property
  • Commodities such as gold

Who can open a SIPP?

In general any UK resident can open a SIPP, but if you’re over the age of 75 you won’t be able to receive tax relief on your contributions. However, individual SIPP providers will often have their own specific criteria for who can invest.

Remember, when you invest in a SIPP you usually won’t be able to access your money until you reach at least 55 years of age.

1 Amounts drawn from your SIPP at retirement are subject to income tax at prevailing rates.

2 If you earn more than £150,000 per tax year, the annual allowance reduces by £1 for every £2 earned above £150,000, down to a minimum of £10,000.