TL;DR
- A SIPP is a personal pension with wider investment choice than a standard personal pension.
- Contributions attract tax relief at the marginal rate, up to the 60,000 pound annual allowance (2025-26).
- Standard SIPPs invest in regulated funds, ETFs, investment trusts, shares, and gilts.
- Full SIPPs can hold commercial property but require specialist providers and higher fees.
- SIPP providers must be FCA-authorised. FSCS covers bad advice claims up to 85,000 pounds.
Last reviewed: May 2026 | Sources: FCA, HMRC, FSCS
A Self-Invested Personal Pension (SIPP) is a type of personal pension regulated by the FCA that gives the pension holder direct control over investment decisions. See also the broader UK pension providers guide and the HMRC pension IHT technical note May 2026 for the latest inheritance tax changes.
Standard versus full SIPPs
A standard SIPP holds regulated investments: authorised funds, investment trusts, ETFs, gilts, bonds, and direct equities. Standard SIPPs are accessible to retail investors with lower platform charges. A full SIPP can hold commercial property, unlisted shares, and other non-standard assets. Full SIPPs require a specialist trustee and have higher fees.
Contributions and tax relief
Most SIPP providers operate relief at source: the holder contributes net of basic rate tax (20%), and the provider claims the remaining 20% from HMRC and adds it to the pot. A net contribution of 800 pounds becomes 1,000 pounds in the SIPP. Higher rate (40%) and additional rate (45%) taxpayers can claim further relief via self-assessment. The annual allowance is 60,000 pounds for 2025-26.
RELATED GUIDES: Pensions and Long-Term Saving
Investment options and charges
Standard SIPPs on online platforms give access to thousands of funds, ETFs, and individual equities. The platform typically charges an annual percentage fee on the portfolio value. Passively-managed index funds and ETFs typically have OCFs of 0.05%-0.20% per year. Actively-managed funds carry higher OCFs, typically 0.50%-1.00% or more. The compounding effect of charges over long investment horizons is significant.
Drawdown and access
The normal minimum pension access age is 55, rising to 57 in April 2028. From the minimum access age, SIPP holders can take up to 25% of the fund as a tax-free pension commencement lump sum. The remainder can be taken as taxable income via flexible drawdown, used to purchase an annuity, or left invested. From April 2027, HMRC IHT changes will affect how pensions are treated on death - see the HMRC pension IHT technical note for details.
FCA regulation and FSCS
All SIPP providers must be FCA-authorised. FSCS protection on SIPPs covers losses arising from bad advice (for example, advice to invest in an unregulated scheme that failed) up to 85,000 pounds per claimant per firm. Losses from a regulated investment within the SIPP are not separately covered by FSCS - the investment risk is the investor own.
Disclaimer: This article is for informational purposes only. It does not constitute financial advice. The value of investments can fall as well as rise. Pension tax rules are complex and change. Consider regulated financial advice before making pension investment decisions.
Frequently asked questions
Who is a SIPP suitable for?
A SIPP is suited to individuals who want control over pension investment decisions, access to a wider fund range, or the ability to hold commercial property (via a full SIPP). Those who prefer a managed solution may find a standard personal pension more appropriate.
Can I transfer an existing pension into a SIPP?
Yes. Defined benefit (final salary) pension transfers above 30,000 pounds require regulated financial advice before transfer under FCA rules. Defined contribution transfers can proceed without advice.
What happens to a SIPP when I die?
A SIPP does not form part of the estate if an expression of wishes is filed with the provider. If the pension holder dies before age 75, the pot can usually be passed on tax-free. If after age 75, it is subject to income tax at the beneficiary marginal rate. See the HMRC pension IHT technical note for the April 2027 changes.
Can I hold cash in a SIPP?
Yes. Cash held within a SIPP earns interest and stays within the tax-advantaged pension wrapper. FSCS covers cash held at an FCA-authorised bank within the SIPP up to 85,000 pounds. Some platforms offer separate cash accounts within the SIPP for uninvested funds.
Are SIPP charges tax-deductible?
Platform charges and provider fees charged within the SIPP are deducted from the pension pot and therefore reduce the taxable growth. They are not separately deductible from income tax. Fees charged outside the pension are not deductible from income.
How this guide was verified
This article draws on HMRC pensions tax manual, FCA COBS pension rules, FSCS guidance on SIPP compensation, and DWP pension access age legislation. No secondary aggregator sites were used.
