Self-Invested Personal Pension (SIPP)

A Self-Invested Personal Pension (SIPP) is a personal pension wrapper that lets the holder choose the investments inside it, rather than being restricted to a default fund picked by the scheme provider. The tax treatment is the same as a workplace pension: contributions get income-tax relief at the saver’s marginal rate, the pot grows tax-free, and at age 55 (rising to 57 in 2028) the holder can take 25% as a tax-free lump sum and the rest as taxable income.

The main appeal is investment flexibility. SIPPs typically allow ETFs, individual shares, investment trusts, commercial property, and a much wider range of funds than an employer scheme. The trade-off is platform fees — usually a percentage of the pot or a flat annual charge — and the responsibility for making investment decisions.

Two contribution tax-relief routes exist:

• Relief at source: providers claim back 20% basic-rate relief from HMRC automatically. Higher-rate and additional-rate taxpayers claim the extra via self-assessment.
• Net pay arrangement (some workplace SIPPs): the contribution comes out of gross pay, so full relief is given up-front.

The annual allowance for tax-relieved contributions is £60,000 (2026), tapered for high earners. Use the UK pension contribution calculator to see the net cost of contributing at your marginal rate.