Self-Invested Personal Pensions (SIPPs)
Please refer to our frequently asked questions section for more information on SIPPs
- Am I eligible for a SIPP?
- How much can I pay into my SIPP each year and receive tax relief?
- How much is the annual allowance?
- What if I am no longer UK resident?
- If I transfer another pension to a SIPP does the annual allowance restriction apply?
- Can a SIPP receive pension transfers from outside of the UK?
- Can more than one pension be transferred to a SIPP?
- What are the investment options?
- At what age can I access my pension?
- What form do pension benefits take?
- How are my pension benefits taxed within a SIPP?
- Is financial advice required?
Am I eligible for a SIPP?
Anyone may become a member of a UK registered pension scheme regardless of where they are resident. However, depending on their personal circumstances and residence status, tax relief on contributions into the pension scheme may or may not be available.
How much can I pay into my SIPP each year and receive tax relief?
In order to receive tax relief on contributions made to a UK registered pension scheme the member must be a Relevant UK individual – please click for more information
How much is the annual allowance?
The annual allowance is set at £40,000 for the 2018/19 tax year and may be lower where the individual has already flexibly accessed their pension benefits or they have income in excess of £150,000.
Where contributions are made in excess of the annual allowance a tax charge will fall due.
What if I am no longer UK resident?
An individual who is a member of a registered pension scheme and is no longer resident in the UK is a relevant UK individual for a tax year if they were resident in the UK both:
- at some time during the previous five UK tax years
- when they became a member of the pension scheme.
These individuals may qualify for tax relief on contributions up to the ‘basic amount’ of £3,600.
If I transfer another pension to a SIPP does the annual allowance restriction apply?
No, the annual allowance only applies to new savings and not to the transfer of existing pension arrangements.
Can a SIPP receive pension transfers from outside of the UK?
Yes, a SIPP can receive transfers from both UK registered pension schemes and overseas pension schemes including Qualifying Recognised Overseas Pension Schemes (QROPS). The overseas pension scheme will need to confirm that they are willing to grant the transfer.
Can more than one pension be transferred to a SIPP?
Yes, it is possible to consolidate multiple pensions within a SIPP.
What are the investment options?
A SIPP allows a broad scope of investments subject to the provider’s discretion. Depending on the type of SIPP purchased, allowable investments may include collective investment funds, equities, corporate and government bonds, cash deposits and UK commercial property. The trustee will need to be satisfied that the investments are sufficiently liquid and commensurate with the member’s attitude to risk.
At what age can I access my pension?
The earliest age at which SIPP benefits may be accessed is 55.
What form do pension benefits take?
The SIPP offers a Pension Commencement Lump Sum (PCLS) of up to 25% of the value of the pension fund. The balance of the fund may be drawn flexibly in line with the UK’s new flexible benefit regime.
How are my pension benefits taxed within a SIPP?
The 25% PCLS is not subject to UK income tax but any payments over and above this are subject to tax at the recipient’s marginal rate of UK income tax.
Where the pension scheme member lives overseas they may be entitled to apply to receive their pension income without tax and instead pay tax in their country of residence. This would be subject to a successful application for relief where a suitable double taxation treaty exists between the member’s country of residence and the UK.
Is financial advice required?
Yes, we recommend that individuals seek appropriate advice whether this concerns the management of an existing pension arrangement or a pension transfer.