Self-Invested Personal Pension

You can open a SIPP if you're:

• Between 18 and 75 years old

• A UK resident

• A UK taxpayer (to benefit from tax relief)

You can open a SIPP whether you're employed, self-employed, or not currently working. There's no requirement to be employed – anyone can start a SIPP.

What do you need to open a SIPP?

You can set up an HL SIPP from as little as £25 a month, or by making a one-off contribution of £100 or more. All you need to hand is your National Insurance number and either your bank details or debit card.

You can also open a SIPP by transferring a pension. The fastest way to transfer is online. You'll need your pension name and type (e.g. Aviva personal pension), policy number and pension value (this doesn't have to be exact) to get started. You should be able to find these details on your annual statement or you can ask your current provider when you’re checking what exit fees apply or if you’ll lose any valuable benefits.

Yes, you can have both a SIPP and your existing workplace pension, and this can be a flexible way to top up your retirement savings tax-efficiently. If you have access to a workplace pension, make sure you’re maximising any employer contributions before deciding whether to pay into a SIPP.

You’ll also need to make sure the money put in across all your pensions each year (including any basic rate tax relief added by the government) doesn't go over the total pension annual allowance of £60,000.

You can hold multiple SIPPs, but there are important factors to consider. While it's possible to have more than one SIPP, managing all your pensions in one place is often simpler and more efficient. Keeping your pension funds consolidated allows for easier tracking and better control of your investments.

If you hold multiple SIPPs, you need to be mindful not to exceed the £60,000 pension annual allowance. It applies across all your pensions, including any workplace pensions.

Pensions are designed to help fund retirement, so you can usually access money in a SIPP from age 55 (rising to 57 in 2028). If you try to take your money out sooner, you may have to pay a penalty. There are circumstances under which you can access your pension early without a penalty. Speak to your SIPP provider or a financial adviser if you're unsure.

Do you have to pay tax on SIPP withdrawals?

Yes, you may have to pay tax on SIPP withdrawals.

25% of your pension pot can be taken tax free. The remaining 75% is taxed as income at your marginal rate, and added to any other income you've received in the same tax year.

For example, if you take a large withdrawal that pushes your total income above the basic rate threshold, the excess will be taxed at higher rates (20%, 40%, or 45%, depending on your total income).

Try our pension income tax calculator to see how your income might be taxed.

All of these retirement income sources are taxable:

• A one-off lump sum (known as UFPLS)

• Flexible drawdown income

• An annuity (guaranteed income for life)

Withdrawals are added to your income for the year, so it’s wise to plan carefully to avoid moving into a higher tax bracket. Also, your first withdrawal may be taxed using an emergency tax code, which can lead to overpayment - though you can claim a refund from HMRC.

The pension annual allowance is set at £60,000 or 100% of your earnings, and this is the total value that can be paid into all your pensions each tax year before triggering a tax charge.

If you want to pay in more and you have unused allowances from the past three years, you may be able to do so.

If you have a ‘threshold income’ above £200,000 and an ‘adjusted income’ of more than £260,000, you will see your annual allowance reduce by £1 for every £2 of adjusted income over the £260,000 limit. This is called the Tapered Annual Allowance (TAA) and can be as little as £10,000.

Every UK resident under 75 qualifies for basic-rate (20%) tax relief on pension contributions, even children and other non-taxpayers. You can usually add whichever's highest out of the amount you earn, or £3,600, and receive tax relief each year. There is also an annual allowance (£60,000 for most people) which limits what you can pay in. Each contribution includes the money you put in, as well as what the government adds in tax relief.

This basic-rate tax relief is added to your pension automatically. Your pension provider claims it for you from the government and adds it to your pension.

If you pay higher-rate tax (40%) you can claim up to a further 20% in tax relief through your tax return or local tax office.

Top-rate taxpayers (45%) can claim back up to a further 25%. You must pay enough tax at the relevant rate to claim back the full amount.

If you’re a Scottish taxpayer the amount of tax relief you can claim is different. Take a look at our information on the Scottish income tax changes page.

Tax rules can change over time and the relief you receive depends on your circumstances.

More on tax relief