5 Things You Need to Know About SIPPs

Sep 10, 2018 9:51:00 AM

1. SIPPs are incredibly tax-efficient

When investing through a company pension scheme, your contributions are made prior to your income being taxed. However, with a SIPP your contributions will be made after your income has been taxed. The SIPP provider will automatically claim the basic rate of 20% and add it to your pension pot. This means that if you contribute £80 into your SIPP, a total of £100 will be invested.

2. You can easily transfer your existing pension holdings into a SIPP

It’s tempting to not choose a self-invested personal pension out of fear that it will be a complicated process, however, most pension holdings can be easily transferred into a SIPP. This means that you can consolidate each of your pension assets into one place, ultimately making it less complicated. Furthermore, when taken as a ‘transfer value’, a final salary scheme can also be transferred across. We do recommend, however, that since actions taken on your pension can be irreversible, that you seek guidance prior to making any decisions to ensure that you’re taking the right action for you.

3. You can continue to utilise a SIPP if you move abroad

If you choose a SIPP and later make the decision to emigrate to another country, you’re able to continue drawing an income from your SIPP and you are able to select pension products in your new country of residence, avoiding detrimental exchange rates that could cause you to lose money. That said, the income you draw may be susceptible to different tax laws and it is important to look into this before committing to a SIPP in order to avoid paying excess tax across different jurisdictions. It is possible that if you’re eligible, you might be better off transferring to a QROPS instead - an overseas pension scheme that is approved by HMRC in the UK and offers many of the same benefits of a SIPP for expats.

4. There are a number of properties you can hold in a SIPP

The rules around holding properties in a SIPP are fairly stringent, and are mostly limited to managed property investment funds of real estate investment trusts - or REITs. That said, there is a possibility of holding residential properties too, and as such, if this applies to you, guidance should be sought out to ensure your property is eligible. SIPPs are particularly perfect for small business owners with commercial properties, as these are one type of property that can be held in a SIPP.

5. There is a lifetime allowance for your SIPP investments

Assuming you want to qualify for tax relief, it is possible to invest up to £40,000 within the 2018/2019 tax year, although it is important to note that this is only for the first 5 years of non-UK residency. Additionally, there is a pension lifetime allowance that is relevant to anyone with pension savings. This allowance is the maximum amount of savings that you can hold across your combined pension schemes without incurring additional tax. This allowance is currently £1,030,000 - or £1.03 million.


To summarise, SIPPs offer huge potential to save you money and maximise your pension savings if you utilise them effectively. For more information on how you can make the most out of your SIPP, or to see if a SIPP is the right choice for you, please book a consultation with one of our financial advisors.


Ian Crompton

Written by Ian Crompton

Ian is Director at Belgravia Wealth Management. He has more than 20 years experience of working in finance and holds an International Certificate in Wealth Management.