A Complete Guide to SIPPs

If you want greater control and flexibility over how your pension is invested, a Self-Invested Personal Pension (SIPP) could be an excellent option. SIPPs are ideal if you want to manage your retirement investments or work with an adviser to make more personalised choices.

Here, we’ll explain everything you need to know about how SIPPs work, what the rules are, how to open one, and whether this account could be the right fit for your financial goals in retirement.

What is a SIPP?

A SIPP is a type of private pension that gives you more freedom over where your pension savings are invested. Unlike standard pensions, which usually offer a limited selection of investment funds, SIPPs allow you to choose from a wide range of assets such as shares, ETFs, investment trusts, and even commercial property.

SIPPs are particularly popular with more experienced investors, those who already have an adviser, or people consolidating old pensions into a single, flexible pot. You can make regular contributions, one-off payments, or transfer existing pensions into a SIPP, all while benefiting from the same tax advantages as other private pensions.

How do SIPPs work?

A SIPP works in the same way as most defined contribution (DC) pensions:

• You contribute money regularly or on an ad hoc basis.

• Your contributions receive tax relief from HMRC ranging from 20% to 45%.

• Contributions get invested into your chosen investments.

• At retirement, you can choose how to access your pension pot.

The key difference with a SIPP compared to other pensions is the range of investment options and the level of control you have. You can actively manage your portfolio or delegate it to a professional manager or pension platform.

SIPPs are held on dedicated investment platforms or with specialist brokers and providers. You can access your money from 55 (rising to 57 in 2028), with the first 25% of your pot usually available tax-free.

SIPP pension rules explained

If you're considering a SIPP, it’s important to understand the key rules and regulations that apply:

How many SIPPs can you have?

You can have more than one SIPP at the same time. Some people choose to open multiple SIPPs with different providers or for different investing strategies. However, managing several pensions can be complex, so consolidation is often recommended.

Examples of SIPP investments

SIPPs offer access to a broad selection of investments, including:

• Stocks and shares from the UK and overseas

• Investment funds and exchange-traded funds (ETFs)

• Corporate and government bonds (like gilts)

• Commercial property and land (not residential property)

• Cash deposits

• Commodities like gold

• Investment trusts

Always check the investment options available before opening a SIPP, as certain SIPPs have a limited range of choices, while others offer a more diverse selection. For example, it’s common to find a cheap UK SIPP with ETFs, but more complex assets like property or gold may require a more premium provider.

Contribution limits and tax relief

You can contribute up to £60,000 per tax year (as of 2025/26) or 100% of your salary, whichever is lower. However, the “carry forward” rule means that you can use any unused pension allowance from the previous three tax years to help increase your limit.

On contributions, you’ll get 20% basic rate tax relief at source, which your platform should add automatically to your pot. In practice, this essentially works out as a 25% top-up on any contributions you make.

So, if you contributed £80, an extra £20 would be added from HMRC. If you’re a higher or additional rate taxpayer, you can claim additional tax relief of up to 40% or 45% by completing a self-assessment tax return.

Are SIPPs tax-free?

SIPPs aren’t completely tax-free because withdrawals at retirement will count towards your income tax for that year, but they do benefit from a number of tax advantages:

• Contributions attract tax relief of 20% to 45%, which means a top-up from the government, giving your pension an immediate boost.

• Investments grow tax-free, and there’s no capital gains tax (CGT) or dividend tax on returns for investments held within the SIPP.

• The first 25% of your SIPP portfolio (£268,275 maximum) can be taken tax-free from age 55 (57 from 2028).

• A total of £1,073,100 can be passed on as a tax-free lump sum if you die before 75; this is known as your lump sum and death benefit allowance (LSDBA).

Withdrawals from SIPPs

You can access your SIPP from age 55 (rising to 57 from 2028), and when withdrawing, you can:

• Take up to 25% tax-free; beyond this, withdrawals are subject to income tax.

• Use drawdown to take income flexibly.

• Purchase an annuity for a guaranteed level of income.

• Withdraw lump sums through Uncrystallised Funds Pension Lump Sum (UFPLS).

How to open a SIPP

Opening a SIPP can be a relatively straightforward process, and many providers allow you to complete it entirely online in just a matter of minutes. Here’s a general step-by-step overview:

1. Choose a SIPP provider: Compare SIPPs based on fees, investment choice, research tools, customer service, and how much help you need managing your investments.

2. Complete the application: You’ll usually need to provide your personal details, National Insurance (NI) number, details of a bank account to link, and information about any existing pensions you plan to transfer.

3. Fund your SIPP: You can make one-off or regular contributions, or transfer existing pension pots. You’ll start receiving tax relief on contributions automatically (basic-rate, with higher-rate claims done through self-assessment).

4. Start investing: Once your account is open and funded, you can begin choosing investments and putting your retirement savings to work. Providers usually can’t give you advice or help with investments unless you pay for a separate service.

Do you need an adviser to open a SIPP?

While many people open SIPPs directly, using an independent financial adviser can be a smart move, especially if you're unsure how to invest or want to figure out the best way to navigate your taxes and overall retirement planning, because an adviser can help:

• Compare providers and find the best SIPP for your goals and needs.

• Arrange the cheapest SIPP for your budget.

• Set up your SIPP correctly based on your retirement timeframe and risk profile.

• Recommend suitable investments tailored to your retirement plan.

• Manage contribution limits, tax relief, and any tax responsibilities.

• Provide assistance with estate planning to minimise any inheritance tax (IHT) burden.

• Evaluate whether a SIPP is right for you compared to other pension options.

• Coordinate your SIPP strategy with your other pensions or retirement income.

This guidance can be particularly valuable for those with larger pots, complex needs, or if you’re transferring from defined benefit (DB) schemes. Many advisers also help you with ongoing reviews to keep your portfolio on track.

If you’d like a free, no-obligation chat with a specialist pension adviser, you can get started here:

Get independent SIPP advice

Get Started

Types of SIPPs available

There are a variety of SIPPs available in the UK, offering various levels of flexibility and cost. Here are the main types:

• Full SIPPs: Offer the widest investment range (including commercial property), typically used by high net worth investors or those with an adviser. These can be more expensive and often include setup and annual fees.

• Low-cost SIPPs: Often offered by online platforms, these are typically the cheapest SIPPs and provide access to a decent range of funds and shares, but may not support complex assets like property. Ideal for hands-on DIY investors.

• Managed SIPPs: A discretionary manager chooses your investments based on your goals and risk tolerance. Or, you can use a robo-advisor platform that selects a portfolio for you. Ideal for hands-off investors.

Best SIPP providers in the UK

The best SIPP provider depends on your needs, goals, and how hands-on you want to be. Here are some examples of popular and well-rated providers in the UK:

• AJ Bell: Low-cost SIPP, flexible platform with helpful DIY tools, but not the most user-friendly.

• Aviva: Large selection of funds and a simple 0.35% fee up to a £500,000 portfolio (no charge over that).

• Hargreaves Lansdown (HL): Solid customer support and investment choice, but relatively high dealing fees.

• Fidelity: Competitively priced, the interface isn’t the best, but it offers good service for higher net worth pensioners.

• Freetrade: Flat-fee model and commission-free investing, but a limited range of assets.

• interactive investor (ii): Large selection of investments and a flat-fee model, which is beneficial for larger pensions.

• Moneyfarm: A Useful option if you want a SIPP robo-advisor platform with cheaper fees for larger portfolios.

• Standard Life: Offers a SIPP capable of investing in funds, gold, and commercial property, but the minimum investment is fairly high.

• Vanguard: Low-cost SIPP with capped fees, useful for passive investing in Vanguard funds.

When comparing SIPPs, it’s important to use the account that best suits your goals and needs. You can compare SIPP providers based on platform fees, dealing charges, available investment options, ease of use, and the level of customer service offered.

Transferring SIPPs

Transferring can allow you to consolidate all your pensions under one roof, giving you better control, lower fees, and a wider range of investment options. You can transfer other pensions into a SIPP, including:

• Old workplace pensions.

• Other types of personal pensions.

• Existing SIPPs with other providers.

Before transferring, you need to check if you’ll lose valuable benefits or guarantees or have to pay any exit fees. SIPP transfers can be completed online and may take 2 to 6 weeks, depending on providers and the investments you hold.

Are SIPPs worth it?

SIPPs are an excellent pension worth considering if you:

• Want greater control over your investments.

• Are comfortable making your own decisions (or working with an adviser).

• Have multiple pension pots and want to consolidate them.

• Value flexibility and transparency with fees and investment choice.

However, a SIPP might not suit you if:

• Have limited investing experience (and don’t use an adviser).

• Are someone who doesn’t need transparency or flexibility.

• Have smaller pension pots, where SIPP fees may erode value.

Alternatives to consider

While SIPPs offer flexibility and numerous advantages, they’re not the only option for retirement savings and taking income. Here are some alternatives to think about:

• Workplace pensions: If you're employed, your workplace pension will typically include employer contributions, tax relief, and low-cost investment options. It's usually the first place to invest for retirement before considering a SIPP.

• Personal pensions (non-SIPPs): These are similar to SIPPs but often come with ready-made portfolios and fewer investment choices. They're suitable for those who want a more hands-off approach or are happy with a provider’s default fund.

• Stocks and Shares ISA: Although not a pension, a Stocks and Shares ISA offers tax-free growth, withdrawals aren’t subject to income tax, and you can access the money at any age, but you get no tax relief on contributions, and you can only put in up to £20,000 each tax year.

• Lifetime ISA (LISA): If you're under 40, you can open a LISA and save up to £4,000 per year with a 25% government bonus (up to £1,000). LISAs can be used for retirement income once you reach age 60, and it doesn’t count towards your income tax threshold. Withdrawals before 60 (unless for a first home or terminal illness) come with a penalty.

• Defined benefit (DB) pensions: If you have one, these often offer guaranteed income and shouldn’t be transferred without advice. However, you may not have a choice whether you can access a DB pension (final salary pension), as most have been phased out.

• Property or other investments: Some people choose to build a retirement income using buy-to-let property, business interests, or other alternative assets. These can be part of a diversified retirement plan but come with different tax rules and risks.

Why choose Money Helpdesk for your SIPP?

Choosing the best SIPP for your individual needs is an important decision. Whether you’re opening your first pension or consolidating several, getting independent guidance can lead to better outcomes and more confidence in your retirement plans.

At Money Helpdesk, our pension experts can guide you through every step. They’ll help you understand your options, choose the best SIPP provider, and manage your retirement portfolio in the most suitable way to reach your goals..

Here are some more reasons why people across the UK trust us to help them with their SIPPs:

• Our advisers specialise in SIPPs and retirement planning

• Free initial pension review with no obligation to proceed further

• Access to FCA-regulated independent financial planners

• Help with consolidation, transfers, taxes and investment planning

Ready for a free initial pension review with a qualified and regulated pension expert? You can get started with your free SIPP pension review here.