Good Money Guide Home > Compare SIPP Providers

SIPP providers offer personal pension plans to those confident in managing and investing their pension. A self invested personal pension (SIPP) can save money over a managed pension and can let you increase the value of your deposits faster if you invest well. Compare the best SIPP providers to take control of your pension investments.

Featured SIPP ProviderWhat can you invest in your SIPP?SIPP ChargesMore Info

interactive investor SIPP

Shares: Yes
Funds: Yes
Bonds: Yes
ETFs: Yes
Ready-made portfolios Yes
Account Fee: £9.99 monthly
SIPP Fee: £10 monthly
Dealing fee: £7.99
Exit Fees: £0
Minimum Investment: £1
See Offer
Special Offer: No SIPP admin fees for 6 months when you open a SIPP (saving £60)

Hargreaves Lansdown SIPP

Shares: Yes
Funds: Yes
Bonds: Yes
ETFs: Yes
Ready-made portfolios Yes
Account Fee: 0.45% yearly
SIPP Fee: £0
Dealing fee: £11.95
Exit Fees: £0
Minimum Investment: £100
See Offer


Saxo Markets

Shares: Yes
Funds: Yes
Bonds: Yes
ETFs: Yes
Ready-made portfolios No
Account Fee: £0
SIPP Fee: £0
Dealing fee: £8
Exit Fees: 50EUR per stock (160EUR max)
Minimum Investment: £10,000
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PensionBee

Shares: No
Funds: Yes
Bonds: No
ETFs: No
Ready-made portfolios Yes
Account Fee: 0.5% yearly
SIPP Fee: £0
Dealing fee: £0
Exit Fees: £0
Minimum Investment: £1
See Offer

Nutmeg Investments SIPP
Shares: No
Funds: Yes
Bonds: No
ETFs: No
Ready-made portfolios Yes
Account Fee: 0.75% yearly
SIPP Fee: £0
Dealing fee: £11.95
Exit Fees: £0
Minimum Investment: £500
See Offer


AJ Bell Youinvest

Shares: Yes
Funds: Yes
Bonds: Yes
ETFs: Yes
Ready-made portfolios Yes
SIPP Account Fee: 0.25% yearly
Dealing charge: £9.95 per online share deal
Fund Dealing Fee: £1.50
Exit Fees: £0 for cash £9.95 per holding
Minimum Investment: £500
See Offer
Pension rules apply

What is a SIPP?

A Self Invested Personal Pension (SIPP) is a government-approved, tax-efficient private retirement account that allows you to control your pension savings. With a SIPP pension, you can choose exactly how your retirement savings are invested.

SIPPs are quite similar to personal pensions, which are pensions that you arrange yourself. However, SIPPs generally offer more investment options than personal pensions. Most SIPPs enable you to invest in UK and international shares, funds, investment trusts, exchange-traded funds (ETFs), bonds, and more.

Contributing to a SIPP can be a very effective way of saving for retirement. When you save into a SIPP, you receive tax relief. This is essentially a reward from the government for putting money away for retirement. Additionally, all investment gains and income within a SIPP are tax-free.

SIPPs are an investment type suited to a range of people including business owners, those who don’t have workplace pensions, those who wish to consolidate past pensions, and those looking for more control over their pension savings. They can be particularly effective for those on higher incomes, who may wish to make extra pension contributions and those who are self-employed, who may be able to offset SIPP contributions against their tax bill.

SIPPs are offered by many providers. However, not all SIPPs are created equal. Some SIPPs offer more investment choices than others while some SIPP accounts offer lower fees than others. Ultimately, the best SIPP for you will depend on your personal requirements.

What is a low-cost SIPP?

Low-cost SIPP pensions are do-it-yourself (DIY) pension accounts that have low fees. They are suited to those who are looking to minimise pension fees and charges.

Like regular SIPPs, low-cost SIPPs offer tax relief and investment gains and income within the account are tax-free. One downside to low-cost SIPPs, however, is that they often offer fewer investment options than regular SIPPs.

How Does a SIPP Work?

To open and pay into a SIPP, you must be aged between 18 and 75 and either a UK resident or a Crown employee (or married to or in a civil partnership with a Crown employee). Those under the age of 18 are eligible for a Junior SIPP.

You can have a SIPP alongside other pension accounts such as workplace pension schemes as well as other investment accounts such as ISAs. You’re allowed to have multiple SIPP accounts if you wish to.

How to Open a SIPP

Opening a SIPP is generally a straightforward process. Usually, you can open one online through a provider’s website. When you open a SIPP, you’ll need to fund your account. There are two ways to do this. One way is to make an initial contribution. The minimum investment for a SIPP varies among providers, however, in many cases, it is very low. The minimum SIPP investment with Hargreaves Lansdown, for example, is just £100.

The other way to fund your account is to transfer an old pension into your new account. To transfer an old pension, you will need to provide your new provider with a few details such as the name of your old provider, the policy type, your policy number, and the approximate value of your old pension.

When you contribute to a SIPP, the government provides you with tax relief on your contributions. When you receive tax relief, some of your money that would have gone to the government as tax goes towards your pension instead.

Once your SIPP is opened and funded, you can invest your money. How you invest is down to you. With a SIPP, you have full control over your investments. Most SIPP providers offer a wide range of investment options including UK and international shares, investment trusts, funds, exchange-traded funds (ETFs), and bonds. Some providers, however, offer more limited options. Most providers allow you to keep your SIPP savings in cash if you want to.

SIPP Tax Relief

Tax relief is paid on your pension contributions at the highest rate of income tax you pay. Basic-rate taxpayers receive 20% tax relief, meaning that an £800 contribution is topped up to £1,000 by the government, while higher-rate taxpayers and additional-rate taxpayers can claim 40% and 45% tax relief respectively through their tax returns. In Scotland, income tax rates are different, so tax relief is applied differently.

If you do not have any taxable earnings, you can still pay up to £2,880 into your SIPP each tax year. This will be topped up to £3,600 after tax relief. With a Junior SIPP, contributions are subject to 20% tax relief.

SIPP Contribution Limits

There is no limit on the amount that you can contribute to a SIPP every year, however, there is a limit on the amount you can contribute and receive tax relief on. This is known as the annual allowance and it’s usually 100% of your taxable earnings or £40,000, whichever is lower. This annual allowance applies across all of your pension accounts and includes the value of any tax relief that is added to the contributions. Once you have made a taxable withdrawal from your SIPP, the annual allowance goes down to £4,000. This is known as the money purchase annual allowance. For higher earners, the rules around pension contributions are different. Higher earners face a tapered annual allowance. With a Junior SIPP, you can contribute up to £2,880 per year. Contributions into a SIPP pension can come from yourself, an employer, or someone else such as a relative or friend.

Can You Contribute to a SIPP if You Live Abroad?

If you move overseas, it may still be possible to contribute to a SIPP. However, the rules around this are quite complex and depend on whether you still have taxable UK income and for how long you have been abroad. It’s a good idea to check these rules before you move abroad.

Lifetime SIPP Limits

The Lifetime Allowance (LTA) is the total amount of money you can build up in your pension accounts while still enjoying full tax benefits. If you go over the Lifetime Allowance, you will pay a tax charge on the excess whenever you take income or withdraw a lump sum from your pension, or reach the age of 75 without having taken any benefits. The Lifetime Allowance is adjusted each year in line with inflation. For the 2021/22 tax year, it is £1,073,100.

When Can You Access a SIPP?

Because a SIPP is a retirement account, you cannot access money in a SIPP until the age of 55. In 2028, this will rise to 57. Once you turn 55, you can make withdrawals from your SIPP, however, you can only withdraw 25% of your SIPP savings tax-free. Anything above this will be added to your income and taxed at your normal rate.

Most SIPP providers do not allow you to withdraw money before the age of 55. If they do, they will likely charge you a large fee for doing so. Additionally, HMRC will tax the funds withdrawn at 55%.

How Safe is a SIPP?

Investing with a regulated SIPP provider is generally very safe as UK regulators require SIPP providers to keep clients' assets separate from their own money. This means that the assets cannot be taken by creditors if the firm goes bust. A SIPP trustee is an organisation that holds assets in a trust for the beneficiaries of the account. They are responsible for ensuring that the account holder's investments are secure. A SIPP Administrator is an entity that is responsible for ensuring that a SIPP is run properly.

Can you switch SIPP administrators?

If a regulated SIPP provider fails, you will be covered by the Financial Services Compensation Scheme (FSCS). This protects up to £85,000 of your investment deposit per person per provider.

It’s important to understand, however, that investments within a SIPP come with risk. The FSCS won’t protect you if your SIPP investments fall in value.

Advantages and Disadvantages of SIPP Investing

Investing in a SIPP has both advantages and disadvantages.

The main advantages of investing in a SIPP are:

  • Contributions come with tax relief.
  • Investment gains and income are tax-free.
  • There is a generous annual allowance.
  • You have control over your retirement savings.
  • You generally have a wide range of investment options to choose from.
  • You can transfer old pensions into your account.

The main disadvantages of investing in a SIPP are:

  • You cannot access your money before the age of 55.
  • When you turn 55, you can only withdraw 25% of your SIPP tax-free.
  • There is a limit to the amount of tax relief you can receive.
  • You are responsible for managing your retirement savings.

Compared to other types of investment and savings accounts, SIPPs have pros and cons.

Compared to a Cash ISA, the main advantages of a SIPP are that contributions come with tax relief, you can invest your money in growth assets, and you can potentially contribute more than the annual ISA allowance of £20,000. The main disadvantages of a SIPP versus a Cash ISA are that you cannot access your money until you turn 55 and at age 55, you can only withdraw 25% tax-free. With a Cash ISA, you can withdraw your money at any time tax-free.

Compared to a Stocks & Shares ISA, the main advantages of a SIPP are that contributions come with tax relief and you can potentially contribute more than the annual ISA allowance of £20,000. The main disadvantages of a SIPP versus a Stocks & Shares ISA are that you cannot access your money until you turn 55 and at age 55, you can only withdraw 25% tax-free. With a Stocks & Shares ISA, you can withdraw your money at any time tax-free.

Compared to a Lifetime ISA, the main advantages of a SIPP are that contributions come with tax relief, you can potentially contribute more than the £4,000 Lifetime ISA allowance, and you can access your money at 55 (versus 60 or when you buy your first property for a Lifetime ISA). The main disadvantages of a SIPP versus a Lifetime ISA is that at age 55, you can only withdraw 25% tax-free. With a Lifetime ISA, you can withdraw all your money tax-free at 60 or when you buy your first property.

Compared to a General Investing Account, the main advantages of a SIPP are that contributions come with tax relief and that all investment gains and income are tax-free. The main disadvantages of a SIPP versus a General Investing Account are that you cannot access your money until you turn 55 and at age 55, you can only withdraw 25% tax-free. With a General Investment Account, you can access your money at any time.

Compared to a normal or private pension, the main advantages of a SIPP are that you have more investment options. The main disadvantage of a SIPP against a normal pension is that you are responsible for managing your own money.

Who Are the Best SIPP Providers?

Three of the best SIPP providers include:

Hargreaves Lansdown

Hargreaves Lansdown is the largest investment platform in the UK with 1.5 million clients. The firm, which is known for its excellent customer service, won the Good Money Guide 2021 award as the best full-service stock broker.

The main advantage of Hargreaves Lansdown’s SIPP is that it offers access to a vast range of investments. Investors have access to domestic and international equities, over 3,000 funds, bonds, and more. Another advantage of this SIPP is that the platform offers plenty of research and investment tools.

On the downside, fees can be higher than those of some other SIPP providers.

Hargreaves Lansdown’s annual account charges depend on whether you’re invested in funds or shares within your SIPP.

For funds, the annual account charge is:

  • 0.45% on the first £250,000
  • 0.25% on the value between £250,000 and £1m
  • 0.1% on the value between £1m and £2m
  • 0.0% on the value over £2m

For shares (including UK and overseas shares, investment trusts, ETFs, gilts and bonds), the annual account charge is 0.45%, capped at £200 per year.

Investors also face charges to place share trades. These are:

  • £11.95 per trade if you made 0 to 9 deals in the previous month
  • £8.95 per trade if you made 10 to 19 deals in the previous month
  • £5.95 per trade if you made 20+ deals in the previous month

Other fees include:

  • Stamp duty on the purchase of UK shares
  • Telephone share dealing costs
  • FX fees on the purchase of international shares

AJ Bell Youinvest

AJ Bell Youinvest operates a low-cost online investing platform for UK DIY investors. AJBell aim to make investing as easy as possible.

One advantage of AJ Bell Youinvest’s SIPP is that the platform is very user friendly. Another advantage is that it offers access to a wide range of investments including stocks in more than 20 markets, over 2,000 funds, ETFs, and bonds.

On the downside, this SIPP doesn’t offer as many investment options as Hargreaves Lansdown’s SIPP.

Annual account charges for AJ Bell Youinvest’s SIPP are as follows:

  • 0.25% per year on the first £250,000 of funds (including unit trusts, OEICs, and structured products)
  • 0.10% on the value of funds between £250,000 and £1m
  • 0.05% on the value of funds between £1m and £2m
  • 0.00% on the value of funds over £2m
  • 0.25% (max £10.00 per month) on shares (including investment trusts, ETFs, gilts, and bonds)

Trading fees are as follows:

  • £9.95 for shares
  • £4.95 for shares if you made 10+ share deals in the previous month
  • £1.50 for funds

Other fees include:

  • Stamp duty on the purchase of UK shares
  • Telephone share dealing costs
  • FX fees on the purchase of international shares

Interactive Investor

Interactive Investor is a low-cost investment provider that offers investors access to over 40,000 shares and 3,000 funds, as well as investment trusts, ETFs, and bonds. The firm won the 2021 Good Money Guide award for the best investment account.

One advantage of Interactive Investor’s SIPP is that it offers a flat-fee structure. This means that annual account charges do not increase as your SIPP grows in size. This structure can help those with larger SIPP portfolios save on fees.

On the downside, Interactive Investor doesn’t offer as many investing tools as some other providers do.

In terms of fees and charges, Interactive Investor offers three different service plans. These are:

  • Investor. The monthly fee for this plan is £9.99
  • Funds Fan. The monthly fee for this plan is £13.99
  • Super Investor. The monthly fee for this plan is £19.99

On top of these fees, there is a £10 monthly SIPP charge.

Trading fees depend on which service plan you choose. For the Investor plan, trading costs are £7.99 for UK shares, ETFs, funds, investment trusts, and US shares, and £19.99 for other international shares.

For the Funds Fan plan, fees are similar to the Investor plan but lower for fund and investment trust trades (£3.99). For the Super Investor plan, trading costs are £3.99 for UK shares, ETFs, funds, and investment trusts, £4.99 for US shares, and £9.99 for other international shares.

Other fees include:

  • Stamp duty on the purchase of UK shares
  • Telephone share dealing costs
  • FX fees on the purchase of international shares

Ultimately, the best SIPP for you will depend on several variables including the types of assets you wish to invest in, the size of your account, and whether you require extra features such as research tools.

When comparing SIPP providers, it’s a good idea to check user reviews of a few different providers. Reviews will give you a better idea of the provider’s overall offering, customer service levels, and platform reliability. You can find platform reviews on Good Money Guide and other review sites.

Some SIPP accounts and providers offer incentives like cashback when you transfer your SIPP.

Which SIPPs Offer the Best Returns?

Many people are often interested in finding out which SIPPs offer the best returns. Comparing the performance of different SIPP accounts is difficult, however. This is because most SIPPs offer a wide range of investments and you are in charge of investing your money. Additionally, the returns from investments within a SIPP such as shares, funds, and ETFs are uncertain and past performance is not an indicator of future performance.

If your goal is to generate high returns from your SIPP, the key is to focus on the range of investments offered by the SIPP, as well as the fee structure, as these factors are the main determinants of a SIPP’s return potential.

Who Offers the Best Online SIPP Platform?

Two SIPP providers that offer excellent online platforms are Hargreaves Lansdown and AJ Bell Youinvest. Both of these SIPP platforms are easy to use, reliable, and offer a broad range of investment tools. Both providers also offer excellent smartphone apps which allow you to access your SIPP on the go.

Who Offers the Best Low-Cost SIPP?

There are several good low-cost SIPPs available to investors today. One of the best low-cost SIPP providers is Vanguard. Vanguard is an investment management company that offers a wide range of low-cost index funds and ETFs and has around 30 million customers worldwide. With the Vanguard SIPP, investors have access to over 75 individual funds including ETFs, active funds, and index funds.

Vanguard’s SIPP has a low account fee of just 0.15% per year, capped at £375 per year. However, investors also have to pay fund management costs of around 0.20% per year on average.

One downside to this SIPP is that it offers fewer investment options than some other SIPPs do. With this SIPP, you cannot invest in individual shares.

Here is how Vanguard’s SIPP compares to Hargreaves Lansdown SIPP.

Who Offers the Cheapest SIPP?

The cheapest SIPP for you will depend on some variables including the types of assets you wish to invest in (i.e. shares vs funds), the number of trades you wish to make, and the size of your account.

For those looking to invest in funds and ETFs, Vanguard is generally one of the cheapest SIPP providers. Its SIPP has a low account fee of just 0.15% per year, capped at £375 per year. Investors also have to pay fund management costs of around 0.20% per year on average.

For those with large pension accounts, Interactive Investor’s SIPP can be very cost-effective. This SIPP offers a flat-fee structure meaning that annual account charges do not get bigger as your SIPP grows in size. Fees for this SIPP start at £19.99 per month.

When looking for the cheapest SIPP, it’s important to think about all fees and charges including set-up fees, annual custody fees, annual investment fees, dealing charges, FX fees, drawdown fees, and exit fees.

Which is the Best SIPP for Beginners?

Some SIPP accounts are better suited to beginners than others. Generally speaking, beginner investors require a SIPP that is easy to use, cost-effective, and offers access to products that are well suited to beginners such as ready-made portfolios.

One SIPP that is well suited to beginners is Wealthify’s SIPP. Wealthify is a robo advisor that offers a managed SIPP product. With Wealthify, you choose an investment style based on your risk tolerance. One advantage of Wealthify is that the minimum investment is just £50. One downside, however, is that there are only a few investment options to choose from.

Which is the Best Self-Managed SIPP?

There are several excellent self-managed SIPPs available to investors today. One of the best self-managed SIPPs is Hargreaves Lansdown’s SIPP. Hargreaves Lansdown is the largest investment platform in the UK with 1.5 million clients.

The main advantage of Hargreaves Lansdown’s SIPP is that it offers access to a vast range of investments. Another advantage is that the platform offers plenty of research and investment tools to help you make investment decisions. Additionally, the platform is easy to use and can be accessed via an app. On the downside, fees are higher than those of some other SIPP providers.

Who Offers the Best SIPP for Self-Employed People?

Many SIPPs are well suited to those who are self-employed.

Those who have the time to manage and monitor their pension savings may want to consider Hargreaves Lansdown’s SIPP. Hargreaves Lansdown is the largest investment platform in the UK with 1.5 million clients. This SIPP offers access to a vast range of investments including domestic and international equities, over 3,000 funds, bonds, and more. One advantage of this platform is that it offers plenty of research and investment tools to help you make investment decisions. Another advantage is that the customer service is very strong. On the downside, fees are higher than those of some other SIPP providers.

Those who don’t want the hassle of managing their own money may want to go with a managed provider such as Wealthify. Wealthify is a robo advisor that offers a managed SIPP product. With Wealthify, you choose an investment style based on your risk tolerance. The advantage of investing with Wealthify is that it’s very easy to set up a pension. One downside, however, is that there are only a few investment options to choose from.

The big advantage of saving into a SIPP when you’re self-employed is that contributions can be treated as a business expense. This means that saving into a SIPP can be very tax-effective.

How to Invest in a SIPP

Investing in a SIPP is generally a straightforward process.

Before you can invest in a SIPP, you’ll need to open and fund an account. This can usually be done online. You can fund an account by making an initial contribution or by transferring your old pension accounts to your new SIPP.

When funding your SIPP, it’s important to remember that the money in a SIPP cannot be touched until you turn 55. So, you shouldn’t invest money you are likely to need before then.

Once your account is open and funded you will be able to invest your money. Your investment options will depend on the provider you choose. Some providers such as Hargreaves Lansdown, AJ Bell Youinvest, and Interactive Investor offer a vast range of investments including domestic and international shares, funds, investment trusts, ETFs, bonds, and more. Others, such as Vanguard and Wealthify, offer fewer investment options.

When investing in a SIPP, it’s important to consider your financial goals and risk tolerance. Those with a lower tolerance for risk should consider investing in lower risk investments such as cautious funds.

Here’s more on how to invest in a SIPP.

What Are the Best SIPP Investments?

The best SIPP investments for you will depend on your personal financial goals, your risk tolerance, and the amount of time you have to devote to investment research. SIPP investment opportunities are broad and varied and include things like commercial property, shares, funds and ETFs. Here’s a rundown of considerations to think about when investing in a SIPP.

Those who have time for investment research may want to consider investing in individual shares. This approach to investing has two main advantages. Firstly, you can potentially outperform the broader stock market if you pick the right stocks. Secondly, you can potentially save on fees. Generally speaking, over the long term, it’s cheaper to own a portfolio of individual shares than a portfolio of funds. On the downside, however, this approach is riskier than investing in funds or ETFs. When you invest in individual shares, you face stock-specific risk. It’s important to build a diversified portfolio to minimise these risks.

Those that do not have time for investment research or would prefer to outsource investment management to others may want to consider equity funds. Funds offer diversified exposure to the stock market which means that they are less risky than investing in individual shares. One example of a fund is the Fundsmith Equity fund. This is a global equity fund. This particular fund has been one of the most popular funds in the UK for many years now due to its strong performance track record. Past performance is not an indicator of future performance, however.

Another option to consider is investment trusts. These are like funds in that they provide diversified exposure to stocks. However, unlike regular funds, they are traded on the stock market. This means you can buy and sell them like regular shares. Two of the most popular investment trusts include the City of London Investment Trust, which aims to provide long-term growth in income and capital, and Scottish Mortgage Investment Trust, which aims to provide long-term growth.

Of course, there are many other investment options to consider. Most SIPPs enable you to invest in shares, funds, ETFs, commodities, bonds, and more. The key is to build a portfolio that is suited to your requirements and risk profile.

You can hold cash with most SIPP providers, however, as with a regular bank account, the returns on cash are likely to be low. Those looking for low-risk investments may want to consider cautious funds such as Vanguard’s LifeStrategy 20% Equity fund.

Here are some of the best SIPP investments to consider for SIPP accounts.

Can You Invest in Ethical Funds in a SIPP?

It is possible to invest ethically within a SIPP. One way to do this is to invest in ethical investing, ESG investing, funds or ETFs. These are now offered by a wide range of SIPP providers including Hargreaves Lansdown, AJ Bell Youinvest, and Interactive Investor.

Some examples of ethical funds include:

  • The Fundsmith Sustainable Equity fund. This fund has a similar philosophy to that of Fundsmith Equity but doesn’t invest in businesses in certain sectors such as alcoholic beverages or tobacco.
  • The Royal London Sustainable Leaders fund. This fund invests in businesses that are deemed to make a positive contribution to society. It invests predominantly in UK businesses but also has a little bit of exposure to the US and Europe.
  • The iShares MSCI World ESG Screened UCITS ETF. This is an ETF that provides exposure to global equities but screens out stocks related to controversial weapons, nuclear weapons, tobacco, thermal coal, oil sands, UN Global Compact violators, and civilian firearms.

Some managed SIPP providers also provide ethical investment options. One such provider is Wealthify. With Wealthify, you can invest ethically by selecting its ‘Ethical’ plan. Wealthify has joined forces with best-in-class ethical fund providers to create a range of five ethical plans that let you invest in organisations committed to having a positive impact on society and the environment.

How to Get the Best Returns from a SIPP

If you want to generate good returns from your SIPP, there are three things you need to do:

  • Choose superior investments. Of course, this is easier said than done. No one knows how an investment will perform in the future and past performance is not an indicator of future performance. By spending some time on research, however, it may be possible to identify investments with strong long-term growth potential.
  • Manage risk carefully. Avoiding big losses is one of the keys to investment success. It’s important to build a diversified portfolio that contains many different assets. This will reduce the risk of suffering big losses.
  • Minimise fees. Over time, fees can have a large negative impact on investment returns. You can reduce fees by selecting products with low fees and not trading excessively.

How to Minimise Charges On a SIPP

There are many ways to minimise charges on a SIPP.

One way is to select a low-cost SIPP. Some SIPPs have lower fees and charges than others.

Another way is to invest in investments that have low fees. ETFs, for example, generally have much lower fees than actively managed funds.

It’s worth noting that on some platforms, some investments attract lower custody fees than others. For example, on platforms such as Hargreaves Lansdown and AJ Bell Youinvest, the annual custody fees for accounts with shares are lower than those for accounts with funds.

A third strategy that can help keep fees low is to minimise trading. Fees from excessive trading can quickly add up.

How Does SIPP Tax Relief Work?

Tax relief is a reward from the government for saving for retirement. When you contribute to a SIPP, some of your money that would have gone to the government as tax goes to your pension instead.

Tax relief is paid on your pension contributions at the highest rate of income tax you pay.

Tax Relief on SIPP Withdrawals

There are rules around making a tax-free withdrawal from your SIPP and then making a contribution into the SIPP with that money to claim tax relief. This is known as ‘pension recycling.’ The rules – which are designed to stop the systematic exploitation of pension tax rules to generate artificially high amounts of tax relief – are quite complex. To decide whether your contributions have been significantly increased, HMRC will examine how much you might have contributed to your SIPP if tax-free cash from withdrawals had not been received and compare this to your actual contributions. You can find more information on pension recycling rules.

How to Transfer a Pension to a SIPP

Transferring a pension to a SIPP is generally a very straightforward process.

The first step is to speak to the SIPP provider you want to transfer your pension to and provide them with details of your old pension. They will need to know the name of the pension provider and the type of pension, your policy number, and approximate pension value. You can normally find all of these details on your annual pension statement. The new provider will usually then take care of the rest of the process.

The transfer time will depend on a few variables including the providers you are using and the nature of your investments. Some providers are more efficient than others when it comes to handling transfers. If your old pension is in cash, it will most likely take less time to transfer because investments will not need to be sold.

With some providers, you can transfer your investments directly. Transferring an investment directly is known as an ‘in-specie’ transfer. Not all providers allow you to do this, however.

What Are the SIPP Transfer Rules for Expats?

You can transfer a SIPP overseas as long as you are transferring it to a Qualifying Recognised Overseas Pension Scheme (QROPS). It’s important to check with the administrator of the scheme you want to transfer to that they will accept the transfer, however. You can find out more about transferring a SIPP to a QROPS.

Those who are non-UK residents may want to consider an International SIPP. International SIPPs were created to fill the gap in the market for UK pension transfers that QROPS could not cater for. They are aimed at non-UK residents who want to keep their pension assets in the UK, rather than transfer to an overseas pension scheme. Like regular SIPPs, International SIPPs are regulated by the Financial Conduct Authority.

If you move overseas, it may still be possible to contribute to a regular SIPP. However, the rules around this are quite complex and depend on whether you still have taxable UK income and how long you have been abroad for. It’s a good idea to check these rules before you move abroad.

What Types of Investments Can You Transfer into a SIPP?

You can transfer a wide range of pensions and other investments into a SIPP including:

  • Old defined contribution (DC) pension accounts. If you have accumulated several DC pensions over the years from past employers, consolidating them into a SIPP is generally a smart move as it’s easier to manage your money.
  • Other SIPPs. Combining your SIPPs into one account makes it easier to manage your pension savings.
  • Final salary or defined benefit (DB) pensions. It is possible to transfer a DB pension into a SIPP. However, this can be risky and it’s important to understand what you may be giving up in terms of benefits. If your DB pension is worth over £30,000, you’re legally required to work with a financial adviser before transferring your pension to a SIPP.
  • Workplace and auto enrolment pensions. It’s usually possible to transfer these kinds of pensions to a SIPP. However, it’s important to assess the pros and cons of doing this. By transferring to a SIPP, you may face higher charges and lose out on employer contributions.
  • NHS pensions. You may be allowed to transfer an NHS pension to a SIPP if you have two years or less NHS pension membership.
  • Small Self-Administered Scheme (SSAS) pensions. SSAS pensions are pension schemes exclusively for company directors. Transferring an SSAS to a SIPP is usually possible although the process can be complex. It’s worth speaking to a financial adviser first.
  • Shares. Transferring shares and other eligible assets that you already own into your SIPP is called making an 'in-specie' contribution.
  • Commercial property. You may be able to transfer a commercial property you own into your SIPP, using the asset to make a pension contribution in place of a cash contribution. However, not all SIPP providers permit this.
  • Here is how to compare commercial SIPP property charges.

Pensions and investments that cannot be transferred into a SIPP include:

  • Civil Service pensions. You can transfer Civil Service pensions to other pension schemes but not to SIPPs.
  • Cash ISAs. It’s not possible to transfer a Cash ISA directly to a SIPP, however, it is possible to withdraw money from an ISA and then make a contribution to a SIPP with that money.
  • Stocks & Shares ISAs. It’s not possible to transfer a Stocks & Shares ISA directly to a SIPP, however, it is possible to withdraw money from an ISA and then make a contribution to a SIPP with that money.
  • Lifetime ISAs. It’s not possible to transfer a Lifetime ISA directly to a SIPP.
  • An annuity. You cannot transfer an annuity into a SIPP.

How to Transfer Property and Other Investments Into a SIPP

Before you transfer property and other investments into a SIPP, it’s important to speak to the SIPP provider to see if they accept the assets you wish to transfer. While some SIPP providers permit commercial property transfers, many don’t.

If the SIPP provider does accept the assets you wish to transfer in, you’ll need to complete a SIPP transfer form. On this form, you list the assets to be transferred. The SIPP provider will then advise you on how to proceed.

When Can You Transfer into a SIPP?

You can transfer a pension into a SIPP whenever you want to. If you do not want to sell your current pension investments, you may be able to transfer them directly to your SIPP via an ‘in-specie’ transfer. In-specie transfers can involve shares, funds, and property. However, not all providers accept in-specie transfers, so it’s important to check this with your providers.

How to Transfer a SIPP to Another Provider

Transferring a SIPP to another provider is generally a very straightforward process. The first step is to complete a transfer form with the new SIPP provider. They will then contact your old SIPP provider and arrange the transfer.

If you wish to do a partial SIPP transfer, you may be able to. However, not all providers permit partial transfers.

Most SIPP providers do not charge fees for transfers in or transfers out. However, some do, so it’s important to check this before you make a transfer. Some providers charge fees for in-specie transfers out. If it’s not possible to make an in-specie transfer, you will have to sell your SIPP investments and this will incur dealing charges.

Here is how to manage exit fees with switching SIPP providers.

You cannot transfer a SIPP to an ISA.

Some SIPP providers offer bonuses for transfer in. For example, AJ Bell Youinvest currently pays up to £35 per investment moved and up to £100 for general exit fees, up to an overall maximum of £500 per person, if the SIPP being transferred is worth £20,000 or more.

Who Can You Transfer a SIPP to?

You can only transfer your SIPP to someone else in exceptional circumstances. The only time you can transfer your SIPP to someone else is in the event of your death and sometimes in divorce settlements.

You can nominate whoever you like to receive your SIPP on your death. This could be your spouse or children, or someone unrelated to you. You don’t need to leave your SIPP to just one person – it can be split up in whatever proportion you like. You can also leave some, or all, of your SIPP to charity. To nominate your beneficiaries, you will need to complete a SIPP beneficiaries form.

When is the Best Time to Transfer a SIPP?

The best time to transfer a SIPP will depend on your personal financial situation.

If you have multiple SIPPs or defined contribution pensions, it may be worth combining them into one SIPP. This will make it easier to manage your money.

If you are unhappy with the service provided by your current SIPP provider, it may be worth transferring to another provider that offers more superior service.

Before you begin a SIPP transfer, it’s important to check the fees involved. Some providers charge fees for transfers in and out.

How Much Do SIPP Transfers Cost?

SIPP transfer costs vary depending on the providers.

Many SIPP providers such as Hargreaves Lansdown and Interactive Investor don’t charge any fees for transfers in or out. However, some providers do charge transfer fees. Some providers, such as AJ Bell Youinvest don’t charge fees for cash transfers out but do charge fees for in-specie transfers out.

Usually, the cheapest way to transfer a SIPP is to select a provider that does not charge transfer fees.

How Does Drawdown Work?

When you put your SIPP into drawdown, you keep the majority of your pension invested, while making flexible withdrawals for income.

You can move your SIPP into drawdown when you turn 55. Once in drawdown, you can take up to 25% of your SIPP as a tax-free lump sum. You can then make withdrawals from the remainder of your pension balance that can be used for retirement income. These will be taxed at your normal rate.

With pension drawdown, you generally have a lot of flexibility. You have flexibility over the amounts you withdraw and the timing of the withdrawals. Additionally, you are not locked into a drawdown for life. At any time, you can use your pension savings to buy an alternative retirement income product such as an annuity.

To set up a SIPP drawdown, you need to ask your SIPP provider to move your pension into drawdown mode. Normally, you have to complete a pension drawdown application form.

Some SIPP providers charge annual drawdown fees. Providers that currently charge for drawdowns include Aegon, AJ Bell Youinvest, Halifax, Interactive Investor, and the Share Centre. SIPP providers that do not currently charge annual fees for drawdown include Hargreaves Lansdown, Vanguard, and Fidelity.

SIPP FAQs

Can you use a SIPP for passive investing?

Yes. Most SIPP providers offer access to ETFs, index funds, and other passive investments. These kinds of investments have low fees.

Do SIPP contributions affect Child Benefit?

You can use SIPP contributions to reduce your adjusted net income. This can potentially help you avoid Child Benefit tax charges if your income is just above the £50,000 Child Benefit threshold.

How much can you pay into a SIPP?

There is no limit on the amount that you can pay into a SIPP annually. However, there is a limit on the amount you can contribute and receive tax relief on. This is known as the annual allowance and usually, it is either 100% of your taxable earnings or £40,000, whichever is lower. This limit applies across all your pension accounts and includes the value of any tax relief added to the contributions. Higher earners face a tapered annual allowance.

The Lifetime Allowance (LTA) is the total amount of money you can build up in your pension accounts while still enjoying full tax benefits. If you breach the Lifetime Allowance, you will pay a tax charge on the excess whenever you take income or withdraw a lump sum from your pension, or reach the age of 75 without having taken any benefits. The Lifetime Allowance is currently £1,073,100.

What happens to a SIPP when you die?

When you die, the remaining value of your SIPP can be passed on to your nominated beneficiaries. You can nominate SIPP beneficiaries by completing a SIPP beneficiary or ‘expression of wishes’ form with your SIPP provider.

Money in a SIPP can normally be passed on free of Inheritance Tax. Any withdrawals the beneficiaries make will usually be tax free if you die before the age of 75. If you die aged 75 or older, any withdrawals made by beneficiaries will be taxed as income.

How many SIPP accounts can I have?

You can have as many SIPP accounts as you want. However, when you have multiple SIPP accounts, it can be harder to manage your money.

Can you have a SIPP and a workplace pension?

Yes. It is possible to have both a SIPP and a workplace pension. It’s also possible to have a SIPP and a private pension.

Can you withdraw a lump sum from a SIPP?

You can withdraw a lump sum from the age of 55. However, you can only withdraw 25% of your SIPP tax-free. The rest will be taxed at your normal income tax rate.

Can you trade through a SIPP?

If your SIPP provider offers access to tradable instruments such as shares, ETFs, and index funds, then it is possible to trade within a SIPP.

Some providers, such as Saxo Markets, enable you to trade contracts for difference (CFDs) in a SIPP. Trading CFDs is a risky strategy, however, as your losses can exceed the amount traded. You can find out more about trading CFDs in a SIPP.

Can you open a SIPP for a child?

SIPPs are available to those aged between 18 and 75. For those under the age of 18, Junior SIPPs are available. With a Junior SIPP, you can contribute up to £2,880 per year and contributions are subject to 20% tax relief. The money is tied up until retirement age.

Another investment option for those under the age of 18 is the Junior ISA. In this account, all investment gains and income are tax-free. The Junior ISA has an annual allowance of £9,000.

Can you borrow money against the value of a SIPP?

It is sometimes possible to borrow against the value of your SIPP. However, not all SIPP providers allow you to do this. Borrowing against a SIPP can be complicated so it’s a good idea to speak to a financial adviser before doing this.

Can you invest a SIPP into a hedge fund?

Some SIPP providers offer access to hedge fund investments. One such provider is Hargreaves Lansdown. Through its platform, it’s possible to invest in funds offered by hedge funds such as Odey Asset Management and Man Group.

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