Self-Invested Personal Pension

You are eligible to open a SIPP account as long as you are a UK resident under the age of 75. You may contribute to as many pensions as you like simultaneously but please be aware of your personal contribution limits and the annual and lifetime allowances.

Investments held in SIPPs are free from income tax and capital gains tax. When paying into your SIPP you will also receive government tax relief, with the amount depending on your circumstances. The government automatically tops up eligible contributions with 20% in pension tax relief, with any further higher or additional rate relief reclaimed by you.

Firstly you get tax relief on your personal contributions to your pension, please read further details on this in the "How does tax relief work?" FAQ.

In addition, you won’t pay capital gains tax on any profits and there’s no tax on dividends from shares or the income earned on bonds.

From age 55 onwards (57 from 2028), you have the option of making unlimited withdrawals. Typically you may take 25% of the pension tax-free and the rest is taxed as income. Our SIPP gives you the flexibility to make withdrawals as you wish - the whole fund may be taken as a lump sum, smaller lump sums or a regular income. Please note a pension may need to last throughout your retirement to find out if you have enough, try our pension contribution or drawdown calculators.

You can pass on the remainder of your pension tax-free to your heirs. Any residual monies left in your pension when you die can typically be passed to your heirs free of an inheritance tax charge. Any withdrawals your heirs then make will usually be tax-free if you died before you were aged 75. If you die when aged 75 or older any withdrawals will be taxed as income at their marginal rate.

Any UK resident under the age of 75 qualifies for basic rate tax relief of 20% on pension contributions up to applicable limits. Higher-rate and additional-rate taxpayers may claim up to a further 20% and 25%, respectively, back through their tax return. Tax year rates of tax and pension tax relief for Scottish taxpayers differ from the rest of the UK. For more information please refer to our guide.

Yes, you can transfer existing pensions to a SIPP to consolidate and manage your pension investments, but there are certain pension types that are inappropriate and not in your interest to transfer. These include workplace pensions where you employer is contributing, schemes with significant exit penalties, and defined benefit schemes with guarantees and other features attached to them that would be lost when transferring.

You’ll only get tax relief on personal pension contributions up to 100% of your UK earnings. There is also an annual contribution allowance to all your pensions of up to £40,000 for most people, dependent on earnings for the tax year and whether you have drawn any taxable retirement benefits. If you’ve already taken money out of a pension, or you’re a higher earner, your annual allowance could be significantly lower. Low or non-earners can also benefit from some basic rate tax relief by contributing a maximum of £2,880 a year (£3,600 after tax relief) to their pension(s).

Charles Stanley has their own SIPPs allowing you to invest in a wide range of investments. You can benefit from a structure that includes all the flexibility permitted by HM Revenue & Customs as regards drawing your benefits, including phasing your retirement.

1. Charles Stanley Alpha SIPP: available through our professionally managed investment services.
   
   £250 annual administration charge
   
   Key features document
2. Charles Stanley Direct SIPP: available through our Online Investing platform.
   
   £100 + VAT. We will waive our SIPP charge if you have combined assets (excl. joint accounts) across the platform in excess of £30,000.
   
   

Alternatively, we partner with a wide range of SIPP providers, contact us to find out more.

A SIPP allows you to invest in wide range of assets, including shares, bonds, funds and investment trusts:

• Funds, unit trusts and OEICs
• UK equities listed on the London Stock Exchange (LSE) and the Alternative Investment Market (AIM)
• Investment trusts and real estate investment trusts (REITs)
• Gilts and bonds
• Permanent interest bearing shares (PIBS)
• Exchange traded products
• Overseas shares listed on the main European US Canadian and Far Eastern markets

A Bed & SIPP is a method of contributing to your SIPP using shares held in your investment account. On your instruction, we will sell your chosen investments in your investment account, top up your SIPP with the proceeds in cash (which will be eligible for tax relief) and then buy back the shares to the value of the net contribution immediately. Once received the tax relief will be held in the SIPP cash account pending your investment instructions.

You have two main options at retirement: Continue investing and take out money from your pot as and when needed (also known as pension drawdown), or use your pot to buy an annuity that guarantees a regular income for life. It is possible to take up to 25% as a tax free lump sum with the remainder of benefits taxable. Taking pension benefits is a complex issue and any decision must be carefully considered.