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ACCOUNT TYPE

SIPP — Self-Invested Personal Pension

Tax relief on the way in, flexible drawdown on the way out

What is a SIPP?

A SIPP (Self-Invested Personal Pension) is a pension you manage yourself. Like all UK pensions, it comes with generous upfront tax relief — but unlike a workplace pension, you choose exactly where your money is invested.

When you contribute to a SIPP, HMRC adds basic-rate tax relief automatically. Put in £800 and your pot receives £1,000. Higher-rate taxpayers can claim an additional 20% through Self Assessment, making a £600 net contribution worth £1,000 in the pension. Additional-rate taxpayers can claim 25% back, meaning a £550 net contribution becomes £1,000 in the pot.

Why use a SIPP?

Upfront tax relief

Basic rate relief is added automatically by your provider. Higher and additional rate taxpayers claim further relief via Self Assessment. This is the most tax-efficient way to save for retirement available to UK taxpayers.

Full investment control

Unlike workplace pensions, you choose your own investments — from ETFs and index funds to individual shares, investment trusts, and bonds. You are not limited to a default fund range.

25% tax-free on withdrawal

From age 57 (rising to 58 in 2028), you can take 25% of your SIPP as a tax-free lump sum. The remaining 75% is drawn as income and taxed at your marginal rate in retirement.

Outside your estate

SIPPs are currently outside your estate for Inheritance Tax purposes, making them a powerful tool for intergenerational wealth transfer. Note: HMRC rules in this area are subject to change.

Who is it best suited for?

A SIPP is particularly powerful for:

  • •Higher and additional rate taxpayers who benefit most from the upfront relief — every £600 net becomes £1,000 in the pot
  • •Self-employed individuals without access to a workplace pension
  • •People who have left employment and want to consolidate old workplace pensions in one place
  • •Investors who want more control over their pension investments than their workplace scheme allows
  • •Those with a long runway to retirement (57+) who can afford to lock money away

What to look for in a provider

SIPP providers vary significantly in cost and capability. Key factors:

Annual platform feePercentage-based fees suit smaller pots; flat fees become more cost-effective as your pot grows above ~£50,000.
Investment rangeEnsure the platform offers the funds and ETFs you intend to hold.
Drawdown capabilityIf you are approaching retirement, check whether the provider supports flexible drawdown (UFPLS, FLID) without requiring you to transfer.
Consolidation supportIf you have multiple old workplace pensions, look for a provider with a straightforward transfer-in process.
FCA authorisationVerify the provider holds the relevant FCA permissions for pension administration.

Provider reviews and comparisons coming soon. We are building independent, fee-verified reviews of the major UK SIPP platforms.