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SIPP

Investing for your retirement

Take control of your pension savings with a Self-Invested Personal Pension. A SIPP has all the tax benefits of a standard pension but you can choose from a greater number of investments to spread your money and potentially help reduce your risk.


Start a SIPP

What is a SIPP?

  • A SIPP is a pension account that holds your chosen investments until you retire and start to draw a retirement income.
  • You choose how much to save, how you want to invest it and how much you take out from age 55 (57 from 2028) onwards.
  • You can also transfer other pensions to a SIPP, letting you manage your whole pension pot in one place. You’ll find a transfer form in our application pack. 
  • With a SIPP, you can invest in shares, Exchange Traded Funds (ETFs), over 2,500 funds and more which makes a SIPP a great way to diversify your portfolio for retirement. 

Why should I invest in a SIPP?

Tax relief

There are a number of tax benefits you receive when you invest in a SIPP.

  • Your investments will be free from UK tax including capital gains and dividend tax. 
  • When paying into your SIPP you receive government tax relief.  For example, if you pay £6,000 into a SIPP then HM Revenue and Customers (HMRC) will add an additional £1,500 to make it £7,500. Higher rate taxpayers can also receive an additional £1,500 through their tax return meaning a £7,500 investment only costs £4,500.

    Those with no UK earnings can still qualify for tax relief. You can contribute up to £2,880 a year, and receive tax relief of £720, giving you a total of £3,600. 

Example of tax benefits

Tax benefits can seem complicated so here’s one example of how it could work in practice. Please note, tax treatment depends on individual circumstances and may be subject to change in the future. We do not give tax advice and as tax relief is dependant on individual circumstances the amounts we show may vary to your own.

SIPP Interest Rates

Your tax bracket

Your contribution

Government top-up (20%)Paid into SIPP account

Further tax reliefClaimed through annual tax return

Total tax relief

Your tax bracket

Non-earner (max contribution)

Your contribution

£2,880

Government top-up (20%)Paid into SIPP account

£720

Further tax reliefClaimed through annual tax return

£0

Total tax relief

£720

Your tax bracket

Basic rate (20%)

Your contribution

£6,000

Government top-up (20%)Paid into SIPP account

£1,500

Further tax reliefClaimed through annual tax return

£0

Total tax relief

£1,500

Your tax bracket

Higher rate (40%)

Your contribution

£6,000

Government top-up (20%)Paid into SIPP account

£1,500

Further tax reliefClaimed through annual tax return

£1,500

Total tax relief

£3,000

Your tax bracket

Additional rate (45%*)

Your contribution

£6,000

Government top-up (20%)Paid into SIPP account

£1,500

Further tax reliefClaimed through annual tax return

£1,875

Total tax relief

£3,375

* 46% in Scotland

Financial security for your family

A SIPP can help you protect your estate from inheritance tax. This means your loved ones won’t risk paying 40% in tax as they might with other assets above £325,000.

  • If the SIPP holder dies before the age of 75, all benefits will normally be paid tax-free.
  • If the SIPP holder dies after the age of 75, it is possible for the beneficiary to take any inherited funds as income through drawdown rather than a lump sum. For example, if they have a taxable income of £30,000 and inherit a £50,000 SIPP, they can choose to take £10,000 per year taxed at 20% rather than a lump sum which could potentially incur inheritance tax of 40%.
  • If your nominated beneficiary doesn't withdraw all of the inherited pension before they die they can also pass this on to their loved ones. This allows wealth to pass down through the generations.

Flexibility at retirement

Upon retirement you can choose to consolidate your pension and access your money in different ways that suits you.

From age 55 (57 from 2028) you can take money from your pension how you want.  You have the freedom to choose one option, mix and match or delay making a decision:

  • Pension drawdown allows you to take a one-off tax-free lump sum of up to 25% and gives flexibility as to how you can take the remainder of your money.
  • An annuity provides you with a regular, secure income for the rest of your life.
  • Continue investing in a SIPP. This can allow your pot to grow tax-free, potentially providing more income once you access it.

Consolidating old pensions can give you a better chance of achieving your retirement goals by giving you greater control and flexibility over where your pension is invested.

Why choose Halifax?

  • Low-cost, flat rate fees - free to open and no percentage based platform fees
  • Interest paid on cash – follows the Bank of England Base Rate which is currently 0.1%
  • Wide investment choice and research tools - UK and international shares, funds, exchange traded funds (ETFs), bonds and gilts plus investment ideas, tools and analysis

Aims of a SIPP?

  • Helps you save tax efficiently for your retirement
  • Gives you freedom to choose where you want to invest your money and spreads your risk
  • Provides income in the form of lump sums and/or regular income
  • Reduce inheritance tax and pass on more of your money

Why save into a pension?

  • Your state pension as of 2020/21 pays £175.20 per week which is below what most people say they want to retire on
  • Money that you would have paid in income tax goes toward your future instead
  • You can take up to a quarter of your pension savings as a tax-free lump sum when you retire
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Low-cost investing

  • No set up charge or percentage fees on holdings
  • Low admin costs (quarterly account charge of £22.50 if the SIPP value is £50,000 or less, and £45 if the value is above £50,000)
  • £12.50 dealing commission per online trade
  • Transfer in other pensions for £60 per plan (capped at £300)
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How to start a SIPP

Completing our application

Step 1 – Start your application online

Step 2 – Download and print our application form

Step 3 – Return the form by post to the AJ Bell address provided.

Start a SIPP

Useful forms

  • Additional contribution – to complete if you wish to contribute a lump sum or start a regular contribution.
  • Transfer form – Transfer an existing pension or SIPP to us
  • Transfer in drawdown – transfer a pension already in drawdown
Find out more
AJ Bell logo

Our SIPP is administered by AJ Bell.
 

SIPP rules explained

  • The maximum that you can save in pension savings is £1,073,100 – this is called the ‘lifetime allowance’ and is calculated across all pensions (excluding the state pension).
  • You can contribute the equivalent of 100% of your earnings (as long as you have enough additional money to support yourself) up to a maximum of £40,000 – the annual allowance for 2020/21. Unused allowances from up to three previous tax years can be carried forward.
  • If you are self-employed, you won’t have an employer adding money into your pension. However, with a SIPP you’ll get tax relief on your own contributions, either up to your annual earnings or £40,000 a year (whichever is lower).
  • When you turn 55 (57 from 2028) you’re free to start withdrawing money from your SIPP, even if you're still working. You can usually take up to 25% of your pot tax free.
  • The annual allowance is tapered for high income individuals. In the 2020/21 tax year, for every £2 of ‘adjusted income’ above £240,000, the annual allowance is reduced by £1. The maximum reduction is £36,000, meaning that someone with an income of over £312,000 has an annual allowance of £4,000.
  • Once you have accessed your pension, the amount you can pay into your SIPP each year drops to £4,000. If you only take a pension commencement lump sum (you can usually take up to 25% of your pot tax free) and no income from drawdown, the limit on contributions is not affected.

Pensions are a long-term investment. The retirement benefits you receive from your pension account will depend on a number of factors including the value of your account when you decide to take your benefits which isn't guaranteed, and can go down as well as up. The value of your account could fall below the amount paid in. Tax treatment depends on individual circumstances and may be subject to change in the future.

Apply for a SIPP

Before you apply for an account, make sure you’ve reviewed and understand the:

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Investments with Halifax Share Dealing Limited are protected up to a total of £85,000 by the Financial Services Compensation Scheme. This limit is applied to the aggregated total of any stock or cash held across the following brands which we administer.

This is in addition to any other savings deposits you may hold across Lloyds Banking Group.

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Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.