Tax benefits

A SIPP offers you a number of valuable tax benefits that can help you make the most of your retirement savings.

Please remember, tax rules relate to the account holder and can change over time. The value of tax savings and eligibility to invest in a SIPP will depend on personal circumstances. To find out more about pension tax relief please view the tax relief factsheet.

One

Automatically receive basic-rate tax relief on your contributions*
If you want to pay £10,000 you only need to write a cheque for £8,000. We claim £2,000 from the tax man on your behalf and add that to your pension.

 

Two

Claim back more tax relief if you are a higher-rate or additional rate taxpayer
A 40% tax payer may claim up to an additional £2,000 back and a 45% tax payer may claim up to an additional £2,500 back on a £10,000 contribution from the tax man through submitting a tax return. ( See how to claim this relief )

 

Three

Receive tax relief even if you don't pay tax
Even if you are a non-taxpayer, you can claim full basic rate tax relief on your personal contributions, up to £3,600 per tax year, into the Fidelity SIPP. This means you can make a maximum contribution of £2,880, to which the taxman adds £720. This also applies to our Junior SIPP account where the child receives 20% basic rate tax relief.

 

Four

Tax breaks when you reach retirement
Take up to 25% of your pension pot as a tax-free lump sum (up to your lifetime allowance), which you can invest or spend as you choose. (This option is normally available from the age of 55).

If you die before age 75, your beneficiaries do not usually need to pay tax on any benefits they receive from pension accounts on your death. However, if any part of the lump sum exceeds your remaining Lifetime Allowance, that part will be taxed at up to 55%. If you die after the age of 75, your beneficiaries will be taxed at their marginal rate if they take an income or lump sum from your pension pot.

 

5

No capital gain tax or income tax on your investment returns
Your investments grow free of income tax and capital gain tax.

 

*However, you should be aware that...

  • You can only claim tax relief on contributions up to 100% of your earnings for a given tax year. Earnings can only include salary and bonuses. Investment income such as dividends and interest cannot be considered earnings for tax relief purposes.
  • Pension contributions in excess of the annual allowance, currently set at £40,000 a year, may be subject to a tax charge of up to 45% on the excess.
  • If you have contributed less than the annual allowance for any of the previous 3 years, you may be able to use it in the current tax year and potentially contribute more than £40,000.
  • The annual allowance is reduced for some high earners. It reduces by £1 for every £2 of earnings over £150,000. The reduction stops at £210,000 so everyone will retain an allowance of at least £10,000. The definition of earnings used for this purpose is not straight forward and includes contributions made to your pension by an employer. Our Annual Allowance guide has more details on this.
  • In most cases, once you access your pension savings flexibly, you will be subject to a restricted annual allowance – the Money Purchase Annual Allowance (MPAA) – of £4,000. As well as this restricted allowance, you will not be able to use the carry forward rules for any other money purchase arrangements you may have.
  • You may only accumulate £1 million within all your registered pension schemes in your lifetime without incurring an additional tax charge. This is called the Lifetime Allowance. Any excess will be taxed and the tax rate will depend on whether you take this excess as a lump sum or as income. You may be able to accumulate more than this amount if you have successfully applied for lifetime allowance protection. If you think you have accumulated or you are close to accumulating more than the lifetime allowance it's advisable to seek financial advice.
  • You will normally only be able to take benefits from the age 55.

Please see the Fidelity SIPP Tax Relief factsheet for more information on annual allowance and tax relief.

 

 

Important information

Please remember the value of investments may fall as well as rise and you may not get back what you invest.

Retirement calculator

Take a look at how much you might need when you retire with our easy-to-use retirement calculator.

We’ll then help you figure out a way to achieve that.

Retirement calculator

Here to help

To find out more about pensions or investing with Fidelity, speak to one of our experienced customer service representatives on

Here to help

0800 358 7480

Monday to Friday, 8am to 6pm Saturday 9am to 6pm.

We can answer your questions, offer support and guidance to help you make informed financial decision. However, Fidelity Personal Investing does not give advice. Should you require this please speak to an authorised financial adviser.

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