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SIPP tax benefits

Pensions, such as a SIPP, are one of the most tax-efficient ways of saving for retirement. Pension contributions receive up to 45% tax relief.

Tax relief depends on individual circumstances:


  • How you could turn £8,000 into £10,000

    Basic-rate taxpayer

    You invest

    Basic-rate tax relief

    If you invest £8,000 (net) in a SIPP, the government automatically adds £2,000 (20%) basic-rate tax relief increasing your total contribution to £10,000 (gross).

    Remember, tax rules can change over time and the relief you receive will depend upon your individual circumstances.

    Download our Guide to Pension Tax Relief


  • How £10,000 can effectively cost as little as £6,000

    Higher-rate taxpayer

    You invest

    Basic-rate tax relief

    Higher-rate tax relief

    If you invest £8,000 (net) in a SIPP, the government automatically adds £2,000 (20%) basic-rate tax relief. You can claim back up to a further £2,000 (20%) higher-rate tax relief via your tax return. £10,000 (gross) in a SIPP could therefore cost you as little as £6,000.

    You can do what you like with the higher-rate tax you get back. Some clients reinvest it in their SIPP and receive another round of tax relief.

    You must pay sufficient tax at the higher-rate to claim the full higher-rate tax relief via your tax return. Remember, tax rules can change over time and the relief you receive will depend upon your individual circumstances.

    You could get up to 60% tax relief if you earn more than £100,000

    Download our Guide to Claiming Higher-Rate Tax Relief

    Download our Guide to Pension Tax Relief


  • How £10,000 can effectively cost as little as £5,500

    Additional-rate taxpayer

    You invest

    Basic-rate tax relief

    Higher and additional-rate tax relief

    If you invest £8,000 (net) in a SIPP, the government automatically adds £2,000 (20%) basic-rate tax relief. You can claim back up to a further £2,500 (25%) higher and additional-rate tax relief via your tax return. £10,000 (gross) in a SIPP could therefore cost you as little as £5,500.

    You can do what you like with the higher/additional rate tax you get back. Some clients reinvest it in their SIPP and receive another round of tax relief.

    You must pay sufficient tax at the higher/additional rate to claim the full tax relief via your tax return. Remember, tax rules can change over time and the relief you receive will depend upon your individual circumstances.

    Download our Guide to Claiming Higher-Rate Tax Relief

    Download our Guide to Pension Tax Relief


  • You don't need earnings to receive tax relief

    Non-taxpayer

    You invest

    Tax relief

    Even though you don't pay tax, you still receive 20% tax relief.

    If you have no earnings (for example the retired, non-working spouses or children) you can still contribute up to £3,600 each year to a pension. You pay just £2,880 and the government automatically adds £720.

    If you earn more than £3,600, you can contribute as much as you earn each year and receive tax relief. For example, if you earn £10,000 you can contribute £10,000 - a payment of £8,000 to which the government automatically adds £2,000.

    Remember tax rules can change over time and the relief you receive will depend on your individual circumstances.

    Download our Guide to Pension Tax Relief


Additional tax benefits

  • No capital gains tax or further UK income tax

    Investments in a pension can grow free of UK capital gains tax and further UK income tax.

  • Unlimited withdrawals from age 55, up to 25% tax-free

    Anytime from age 55 (57 from 2028), you have the option of making withdrawals, usually up to 25% tax free and the rest taxed as income. The Vantage SIPP gives you the flexibility to make withdrawals how you wish - the whole fund as a lump sum, smaller lumps sums or a regular income. Remember a pension needs to last throughout your retirement.

  • Pass on your pension tax free to your heirs

    Any money left in your pension when you die can usually be passed to your heirs free of inheritance tax. Any withdrawals they then make will usually be tax free if you died before you were 75. If you die when 75 or older any withdrawals will be taxed as their income or potentially taxed at 45% if taken as a single lump sum.

Pension tax relief calculator

Use our pension tax relief calculator to find out how much tax relief you could receive on your pension contribution.

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Important information

Pension and tax rules are subject to change by the government. Tax reliefs referred to are those currently applying. Their value depends on your individual circumstances.

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  • I have transferred various pensions to my SIPP at Hargreaves Lansdown. I must say I have received an excellent service by phone and by email. All the hassle was taken from me by HL and made my life a lot easier. Also dealing in funds online and switching is straight forward.

    Mr Bhudia, Middlesex

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*HL survey: 252 respondents, November 2014

Important information

A SIPP is a type of pension for people happy to make their own investment decisions. Investments go down in value as well as up so you could get back less than you invest. The rules mentioned are those currently applying and could change in the future. You can normally only access the money from age 55 (57 from 2028). Tax reliefs depend on your circumstances. This website is not personal advice, if you are unsure an investment is right for you, please seek advice.

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