Self-Invested Personal Pension (SIPP)
About
A self-invested personal pension (SIPP) is a personal pension you control. Instead of a provider picking a fund for you, you choose what goes in. That might be shares, funds, investment trusts, commercial property, or a portfolio your adviser builds and runs for you.
The tax works like any pension. Contributions get relief at your income tax rate, the money grows free of income and capital gains tax, and you can draw on it from age 55, rising to 57 in 2028.
You can pay in up to £60,000 a year, carry forward unused allowance from the previous three years, and bring old pensions scattered across former employers into one place. More control means more decisions, and the investments inside a SIPP are yours to get right.
At Vintage Wealth Management, we treat a SIPP as one part of your wider retirement plan. We help you decide whether it's the right home for your savings, manage the investments inside it, and keep the plan on track as the rules shift. That includes the April 2027 change bringing most unused pension funds into your estate for inheritance tax.
What is a SIPP and how does it work?
Is a SIPP right for you?
A SIPP is a personal pension that lets you choose and manage your own investments. SIPP stands for self-invested personal pension. With a standard personal pension, the provider runs your money in a set fund. A SIPP opens the door to a much wider range, including shares, funds, ETFs, investment trusts, gilts, and even commercial property.
It works in three stages. You pay money in, the government adds tax relief, and you invest the combined amount however your strategy allows. Your pot grows free of income and capital gains tax while it stays invested.
When you pay in, you get tax relief at your income tax rate. Basic-rate taxpayers get 20% added at source, so an £800 contribution becomes £1,000 in the pension. Higher and additional-rate taxpayers claim a further 20% or 25% through self-assessment. Even non-earners can pay in £2,880 a year and the government tops it up to £3,600.
You can start taking money out from age 55, rising to 57 in 2028. The first 25% is usually tax-free, up to a limit of £268,275, and the rest is taxed as income when you draw it. You can take it through drawdown, buy an annuity, or withdraw lump sums, and you don't have to touch any of it until you're ready.
A SIPP is right for you if you want control over how your pension is invested and have enough saved to make the wider choice pay off.
Three groups get the most from one. Higher earners use a SIPP to claw back a large income tax bill. The self-employed and business owners, with no workplace scheme behind them, often rely on it as their main pension. Anyone holding several pensions from past jobs can bring them together in one place.
The self-employed case is the strongest. No employer means no one else is funding your retirement. Company directors get an extra advantage, because they can pay in from pre-tax profits and cut their corporation tax bill at the same time. But you're making the decisions, and that comes with responsibility.
A SIPP isn't for everyone. The investments inside it can fall as well as rise, and you might get back less than you paid in. More choice means more to manage, and charges usually run higher than a standard personal pension. If you'd rather hand those decisions to someone else, a simpler pension does the job. Where a SIPP fits, we build and run the investments with you, move old pensions in where it helps, and keep it aligned with the rest of your plan.
SIPP vs personal pension: what's the difference?
A SIPP and a standard personal pension both get the same tax relief and follow the same contribution rules. The difference is what you can do inside them.
With a personal pension, the provider picks the funds. You'll usually choose from a shortlist of managed portfolios or default options, and the provider handles everything. It's simple, it's low maintenance, and for a lot of people it does the job.
A SIPP opens the full range. You can hold individual shares, funds, ETFs, investment trusts, gilts, corporate bonds, and in some cases commercial property. You or your adviser pick the investments, and you can change them whenever you want. That wider choice is why SIPPs tend to suit people with larger pension pots, specific investment views, or an adviser managing the portfolio on their behalf.
SIPPs cost more to run. You've got platform fees, dealing fees, and advice fees on top of what a standard personal pension charges. The wider investment range only helps if you're going to use it. If a shortlist of managed funds does what you need, a SIPP is overkill.
What's changing for SIPPs in 2027 and 2028?
From 6 April 2027, unused funds in your SIPP will be included in your estate for inheritance tax purposes. Until now, leaving your SIPP untouched and drawing from other assets first has been one of the most effective ways to pass wealth on outside your estate. That's going. The Finance Act 2026 confirmed the change, and HMRC estimates it'll bring around 10,500 additional estates into IHT in the first year.
Spousal exemptions still apply, so anything passing to a surviving spouse or civil partner remains IHT-free. But if you've been deliberately preserving your SIPP to pass it on, the order you draw down your SIPP, ISAs, and other assets now directly affects how much IHT your estate pays.
From 6 April 2028, the minimum age you can access your SIPP rises from 55 to 57. If you were born before 6 April 1971, you're not affected. If you're born between 6 April 1971 and 5 April 1973, you're in a transitional window.
HMRC has confirmed that if you've already started drawing from your SIPP before April 2028, those payments can continue, but you won't be able to crystallise any new benefits until you turn 57. If you're planning to access your SIPP in your mid-fifties, don't leave it until 2028 to work out how it affects you.
Why work with Vintage Wealth Management.
Why work with Vintage Wealth Management.
A SIPP doesn't sit in a silo. Your other pensions, investments, tax position, and protection all feed into it. We look at the full picture and build a plan you can act on. Vintage Wealth Management has been advising on pensions and retirement planning for over a decade. We're named in the FT Adviser UK Top 100 Financial Advisers every year since 2021. Our team includes Chartered Financial Planners and Fellows of the Personal Finance Society who specialise in pension planning, tax-efficient investment, and retirement income. We've got offices in Central London, North West London, Portsmouth, Buckinghamshire, Swindon, and Dublin, and we work with clients across the UK. Get in touch and we'll take it from there
Frequently asked questions about SIPPs
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If you're a higher-rate taxpayer, yes. Everyone gets 20% basic-rate relief added to contributions automatically. Higher-rate taxpayers claim a further 20% through self-assessment, and additional-rate taxpayers claim 25%, taking total relief to 40% or 45%. You only get the extra back on income taxed at that rate.
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You can pay in up to £60,000 a year across all your pensions and still get tax relief, or 100% of your earnings if that's lower. Unused allowance from the previous three years can be carried forward. If you earn over £260,000, or you've already drawn income flexibly, a lower limit applies.
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Yes. You don't need to be employed to open a SIPP. If you have no earnings, you can still pay in £2,880 a year and the government tops it up to £3,600 with basic-rate tax relief. Someone else, such as a spouse, can make that payment for you.
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The main disadvantage of a SIPP is responsibility. You choose the investments, so the returns are down to your decisions, and they can fall as well as rise. Charges are usually higher than a standard personal pension, and the wider choice takes time to manage. A SIPP makes less sense if you won't use the flexibility.
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Yes. Many people run their own SIPP and pick every investment in it. The catch is that pensions are hard to undo if you get them wrong, and the choice is wide. Plenty of people use a SIPP precisely because an adviser manages the investments for them while they keep oversight.
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You can start taking money out from age 55, rising to 57 in 2028. The first 25% is usually tax-free, up to £268,275, and the rest is taxed as income. You can draw it through drawdown, buy an annuity, or take lump sums. Before 55, you generally can't touch it.
Disclaimer
The information supplied is based upon our understanding of current UK law and HM Revenue and Customs (HMRC) practice. Tax law and HMRC practice may change from time to time. The value of any tax relief will depend on the individual circumstances of the investor. Your capital is at risk. The value of investments within a SIPP can fall as well as rise, and you could get back less than you invest. Past performance is not a reliable indicator of future results. A pension is a long-term investment not normally accessible until age 55 (rising to 57 from April 2028). Your retirement income could depend on the size of your pension fund at retirement, future interest rates, tax legislation, and your circumstances at retirement. The Financial Conduct Authority does not regulate tax planning. The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied, is given in relation to such information. Vintage Wealth Management or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.