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Switch Your Pension on

Switch Your Pension on

Make the most of this year's tax rules – why and how.

Pensions offer some extremely valuable tax perks but, given all the tax rises already announced this year, there’s no guarantee that all the government’s tax perks will be around forever.

With half the tax year gone already, and the Autumn Budget just around the corner, now might be the perfect time to review your savings and investments to make sure you’re taking full advantage of the current pension tax breaks.

Here are some essential resources and useful planning tools to help you make the most of your pension today, so you can thank yourself later.

Important information: This isn't personal advice. If you’re unsure what’s best for your situation, please seek advice. Pension and tax rules can change, and their benefits depend on your circumstances. All investments can rise and fall in value so you could get back less than you invest. Typically you need to be at least 55 (57 from 2028) to access the money in a pension.

Pension tax breaks on offer

Under current pension rules, the government adds 20% on top of your personal pension contributions – essentially giving you back tax paid on the money. Let’s say you added £8,000 into a pension, you’d get £2,000 in tax relief automatically added on top for free.

If you pay tax at a higher rate you could claim back up to an extra 25% in pension tax relief (26% for Scottish taxpayers) through your tax return.

Be aware, you need to be under 75 to receive tax relief.

How much can I pay into a pension and receive tax relief?

There are limits on how much tax relief you can receive and how much you can pay into a pension. You’ll only get tax relief on personal pension contributions up to 100% of your earnings, or £3,600 if this is greater (if you’re a low or non-earner). Your pension contributions, including any made by your employer, are also limited by the annual allowance which is currently £40,000 each tax year for most people.

Just remember, pensions are designed to help fund retirement and later life. This is why money can’t usually be taken out again until at least age 55 (rising to 57 in 2028). Pension and tax rules can change, and benefits depend on your circumstances.

More on pension contributions

Benefits of paying into a pension

Making the most of your pension allowances now, could mean you’re better off in the future.

  • Tax free investing - grow your money free of UK income and capital gains tax.
  • Shelter up to £40,000 - in your SIPP each tax year and get up to 45% in tax relief (46% if you’re a Scottish taxpayer).
  • Free from inheritance tax - pass on wealth tax-efficiently, and in some cases completely tax free.

Pension and tax rules can change, and benefits depend on your circumstances. Usually you can take up to 25% of a SIPP tax free, the rest is taxed as income.

Pay money into your SIPP

You can change your pension contributions whenever you like.

Set up monthly payments from as little as £25, or make one-off payments of £100 or more.

Add money to your SIPP

Benefits of the HL SIPP

Make the most of your pension allowance, with the award-winning HL Self-Invested Personal Pension.

  • A tax-efficient way to save - grow your money free of UK income and capital gains tax. Shelter up to £40,000 each tax year and get tax relief back from the government.
  • Invest where and how you want to - pick your own investments, select ready-made portfolios, or pay a financial adviser to choose investments for you.
  • Manage your pension with ease - check your pension whenever you like, online and with the HL app.
  • Flexibility at retirement - make withdrawals to suit your needs. You’re free to choose from all the pension freedoms. Usually you can take up to 25% of a SIPP tax free, the rest is taxed as income.

More on the HL SIPP (including charges)

Start with a bank payment

Set up monthly payments from as little as £25, or make one-off payments of £100 or more.

You can change your pension contributions whenever you like.

Open a SIPP

£25 A MONTH NOW COULD BE WORTH THOUSANDS IN RETIREMENT

Benefits of regular investing

Paying in from as little as £25 a month can help you to reach your retirement goals, but it could also be a sensible way to help manage market volatility and get into healthy and affordable financial habits.

  • It's good discipline - it takes the emotion out of your decisions, and you won’t be tempted to try timing the market.
  • It's automatic - so long as you check you're still in line with your investing goals, the direct debit does the work for you.
  • It’s flexible - you can increase or decrease your monthly direct debit to suit your current situation. You can even stop or pause payments if you need to.

Invest regularly by direct debit

How to review your investments

Stock market performance and the investments available are constantly changing. It’s important that you’re aware of what your investments are doing and if they continue to match your goals. As your circumstances change, it could be sensible to adjust your portfolio accordingly.

This step-by-step guide to reviewing an investment portfolio could help.

SIPPs are for people who are happy to make their own investment decisions. If you’re considering starting an HL SIPP, it’s important you know how to review and build an investment portfolio.

We offer a step-by-step guide to reviewing an investment portfolio.

How to review a portfolio

Our latest SIPP investment ideas

If you’ve decided to add money to a SIPP and you’re looking for investment inspiration, these four fund ideas could be worth a look. They include total return, equity income, ESG and growth funds, but are in no way a personal recommendation.

It’s your responsibility to make sure that any investments you choose align with your own objectives and that you’re happy with the associated risks and charges before investing. Check any new investment forms part of a diversified portfolio. All investments can rise and fall in value, so you could get back less than you invest. If you’re not sure an investment is right for you, seek advice.

Total return fund

Troy Trojan

Wealth ShortlistWealth Shortlist
  • Aims to grow investors' money steadily over the long run, while limiting losses when markets fall.
  • Invests in a mix of investments including shares, bonds, commodities and currencies and includes some of the world's best-known companies with highly recognisable brands.
  • The fund has the flexibility to invest in higher-risk smaller companies and while the fund contains a diverse range of investments, it is concentrated, which is a higher-risk approach.

VIEW FACTSHEET INCLUDING CHARGES

VIEW KEY INVESTOR INFORMATION

Invest now in Troy Trojan

UK equity income fund

Aviva Inv UK Listed Equity Income

Wealth ShortlistWealth Shortlist
  • The fund managers look for companies that are market leaders with a competitive advantage and have predictable cash flow. An emphasis on dividends and dividend growth makes this a more conventional UK equity income fund.
  • It could help form part of the foundation of an income portfolio, and could diversify other UK funds, or diversify the income paid by bond funds or a global equity income fund.
  • This is a concentrated fund, so each holding can have a significant impact on performance, both positively and negatively, and can increase risk. It can invest in smaller companies which adds diversification but also adds risk.

VIEW FACTSHEET INCLUDING CHARGES

VIEW KEY INVESTOR INFORMATION

Invest now in Aviva Inv UK Listed Equity Income

Responsible investing fund

Legal & General Future World ESG Developed Index

Wealth ShortlistWealth Shortlist
  • Aims to provide long-term growth whilst being environmental, social and governance focused.
  • Invests in broad developed stock markets, such as the US, Japan and Europe.
  • Invested in around 1,300 global companies, focused towards sectors such as technology, pharmaceuticals and financials.
  • The fund has the flexibility to use derivatives which adds risk if used.

VIEW FACTSHEET INCLUDING CHARGES

VIEW KEY INVESTOR INFORMATION

Invest now in Legal & General Future World ESG Developed Index

Asia Pacific growth fund

ASI Asia Pacific Equity

Wealth ShortlistWealth Shortlist
  • The fund has a bias towards businesses that rely on growing consumer wealth, but aims to have at least some exposure to most major sectors.
  • Invests in a wide range of Asian markets, including both established and less-developed higher-risk economies.
  • This fund could provide exposure to the Asia Pacific region and help diversify a global growth portfolio with a long-term view.

VIEW FACTSHEET INCLUDING CHARGES

VIEW KEY INVESTOR INFORMATION

Invest now ASI Asia Pacific Equity

New to investing?

Watch our videos to get to grips with the basics - getting started could be easier than you think.

Or download this helpful guide to learn about investing in a Self-Invested Personal Pension.

The ability to make my own investment decisions with the backing of excellent online information and the availability of advice if needed.

A Law

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