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What is a SIPP?

A SIPP, or self-invested personal pension, is a tax-efficient way to save for your retirement. As with other types of pension, you can receive tax relief on money paid into your SIPP and you won’t have to pay tax on any growth your pension savings achieve.

You can have a SIPP alongside other pensions, such as workplace schemes, and the contributions into your SIPP can come from yourself, an employer or someone else, such as a relative or friend.

Tax relief means that if you pay £100 into your SIPP, the government will add an extra £25. Even if you don’t pay tax, you can get tax relief on payments of up to £2,880 each tax year, boosting them to £3,600. If you pay a higher rate of tax, you may be able to claim further relief through your tax return. There is a limit to the pension contributions you can receive tax relief on – for most people this is either 100% of their taxable earnings or £40,000 each tax year, whichever is lower.

It is up to you what investments you have in your SIPP – there is a wide range to choose from.

You can usually start taking money out of your SIPP when you are 55. In most cases, you’ll then be able to withdraw 25% of your pension savings tax-free. Any withdrawals above this will be taxable.

You can open a Fidelity SIPP here, or call us on 0800 368 1722 if you need any more information.

Rates of tax relief may be different for people who live in Scotland.