What Is SIPP (Self-Invested Personal Pension)?
A flexible pension wrapper that lets you choose your own investments; contributions attract tax relief at your marginal rate.
Definition
A Self-Invested Personal Pension (SIPP) is a type of personal pension that gives you control over the investments held within it. You can invest in shares, funds, bonds, and other assets. Contributions receive tax relief at your marginal rate: basic rate taxpayers get 20% relief added automatically, higher rate taxpayers can claim an additional 20% through self assessment. The annual allowance for pension contributions is £60,000 (or 100% of earnings if lower) in 2026/27. You can take 25% of your pot tax-free from age 57 (rising to 57 from 2028); the remainder is taxed as income. SIPPs are particularly attractive for the self-employed and those wanting to consolidate pension pots.
Example
A higher-rate taxpayer contributing £800 net to a SIPP receives £200 basic rate relief automatically (total £1,000 in the pension) and can claim another £200 via tax return. Net cost: £600.