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What is a SIPP?

Tax efficient retirement savings

A Self Invested Personal Pension (SIPP) is a tax efficient way to invest for your retirement or your child's retirement, which gives you control over where and when you invest.

A SIPP may not be appropriate for everyone, but for those with investment experience or the time to manage their own investments, it can be well worth considering.

Like all pensions, a SIPP offers tax relief on contributions. The tax benefits will depend on your circumstances and tax rules are subject to change by the government. SIPPs are governed by HMRC rules covering how much can be invested in any tax year.

Choose a SIPP with Selftrade for:

  • Flexibility – a choice of accounts
  • Control – investors can set their own investment strategy and choose where and when to invest
  • Portability – the rules for SIPP transfers are the same as those for personal pensions, meaning that it is generally possible for a SIPP to be transferred to an occupational pension scheme, personal or stakeholder pension. SIPPs can also accept transfers from various types of pension plan

Find out more

  • See our free Guide to SIPPs, produced in association with Investors Chronicle
  • Work out how much you should be putting aside for your pension with our pension calculator

Pension allowances

For tax year 2014/15
Lifetime allowance (LTA)* £1,250,000 (reduced from £1,500,000 with effect from 6/4/2014)
Annual allowance (inclusive of your own contribution and any other amounts paid into an approved pension scheme) £40,000 (gross), with up to three-year 'carry-forward'**
(reduced from £50,000 2011/12 - 2013/14)
Max. pension commencement tax free lump sum 25% of pension benefit value
Max. relievable personal contribution 100% of relevant UK earnings or £3,600 (gross) whichever is the greater
Lifetime allowance charge if excess drawn as cash 55%
If drawn as income 25%
Annual allowance charge Your marginal tax rate

*The LTA was introduced in April 2006. Different limits apply depending upon when pension assets were accumulated. LTA protection applies to pension assets of more than £1.5m accumulated prior to 6/4/2006, and to pension pots which, as at 5/4/2014 exceed the new 2014/15 limit – please see HMRC website for further details.

Details are provided for information only. They reflect Selftrade's understanding of the legislation and Treasury guidance and may be subject to change. You should check with your pension provider or financial adviser for full details and to determine how they may apply to your personal circumstances.

** You may carry forward unused annual allowance from the previous three years and catch up on contributions you have missed. For more information and rules, please see HMRC website.

Useful links

The Pensions Advisory Service


  • The value of investments can fall as well as rise and any income from them is not guaranteed. You should be prepared to lose your investment. Past performance is not a guide to future performance.
  • Selftrade provides you with a range of tools and information to help you make informed investment decisions but does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.
  • The extent and value of any SIPP tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change. If now or in the future, you have the option of joining an employer's occupational or contributing pension scheme you should consider joining or making contributions to it. Once in a pension your money is only accessible, in general, from age 55.